For the past several years, there has been no small amount of discussion regarding the role credit data plays in decisions made by lenders. More specifically, this back-and-forth has centered around which metrics carry the most weight within the broad spectrum of information that can be considered "credit data," and whether info related to alternative credit has a place in all of this. 

Lenders operating within traditional financial institutions like banks and credit unions typically shied away from alternative credit data - or at least claimed to when queried in a public, formal context. However, recent research identified that this mindset has changed somewhat, and this could have major implications for the near future. 

Majority of lenders using alternative data
Citing research recently conducted by Experian, National Mortgage News reported that 80 percent of lenders claim they use a combination of a traditional credit scoring rubric like a FICO score and alternative data when making decisions on whether or not to extend credit to loan applicants.

All things being equal, this wouldn't be particularly noteworthy - it would just exemplify due diligence. But because banks and traditional lenders so often stuck exclusively to FICO and other cut-and-dried credit models in the past, these institutions' deciding to simply factor another type of information into their efforts toward final decisions does represent a significant evolution in their perspective.

More lenders are becoming open to alternative credit data than ever before.

Answering the challenge of competition
Alternative web-based lenders emerged in the early and mid-2010s, to fill the vacuum created by the drastically tightened lending standards of banks and traditional financial institutions after the 2008 global financial crisis. Unsurprisingly, they were fairly quick to try alternative credit scoring models. Having little to lose in the gambit, these alternative organizations, along with thousands of consumers and small businesses, ended up being some of the earliest proponents of programs like PRBC.

Now, with traditional lenders beginning to regain some of their lost ground, it's natural that they'd review the choices made by their upstart competition and see which ones they could adapt for their own benefit. Their past abundance of caution apparently notwithstanding, alternative credit data made the cut of new tools they felt were worthy of their use. 

Future expansion of alternative credit
Not all of the factors limiting the wider disbursement of alternative credit stem from company or lender actions. According to National Mortgage News, some of this red tape relates to state and federal regulations regarding utility and phone bill statements, data from which is commonly used to calculate alternative credit. 

Consumers clearly want this info considered by lenders - almost 50 percent of them, per the above-mentioned survey. Legislation currently under debate by the U.S. Senate, which passed the House of Representatives unanimously as the Credit Access and Inclusion Act of 2017, could eliminate the regulatory hurdles related to this information and make it easier for consumers to obtain financing.