The advent of alternative data in personal lending has given millions of Americans access to credit they wouldn’t have had before.
These are people who were considered “credit invisible” — i.e. no history with the three major credit agencies — or simply had minimal credit profiles, but who can now access lenders who use things like bank accounts, rental and utility payments, and asset ownership to determine credit worthiness.
Dun & Bradstreet says it wants to bring that same access to small businesses. The commercial credit information service announced Tuesday (March 30) it was working with Plaid to bring alternative data to business credit profiles.
The hope is to allow small businesses to securely share financial information to create and improve their credit profile, making Dun & Bradstreet the first service to incorporate permissioned bank data with the purpose of creating new business credit scores.
“For businesses, credit profiles play a role similar to consumer credit scores in lending decisioning, but many small businesses are unaware they have a profile and may lack the historical trade data necessary to improve it,” Plaid’s John C. Pitts writes. “These profiles are not only used by banks and lenders, but also by prospective partners, customers, and vendors to evaluate a company’s financial health before entering into a business relationship.”
This news comes a few weeks after Plaid announced Plaid Income, a product designed to streamline income verification to make it easier for consumers to do things like rent apartments or secure loans.
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That tool expands customer-permissioned information access to include payroll, giving users greater control to certify income and employment and helping financial institutions make better decisions with income, tax and employment information.
A recent PYMNTS interview with Steve Allocca of the small business lending FinTech Blue Vine delves into the changing world of business credit.
