New Scoring Solution Gives Lenders Insights to Help ‘Credit Invisible’ South Africans

TransUnion Africa has launched CreditVision Link, a new scoring solution that could see millions of previously ‘credit invisible’ and ‘thin file’ South Africans gain access to much needed credit. Consumers who don’t have an established credit history often don’t qualify for credit, and CreditVision Link uses alternative data to help lenders better evaluate consumer risk for financial products such as retail clothing accounts, credit cards, loans and mortgages.

“As South Africans navigate the recovery from the COVID-19 pandemic, this new capability will help provide opportunities for many consumers who previously couldn’t get credit. It will help consumers build financial security by getting access to responsible credit, while giving credit providers deeper insights into the risk behaviour of previously invisible and thin file segments of the population,” said TransUnion Africa’s CreditVision Product Manager, Christelle Rall.

TransUnion’s latest Financial Hardship report*, which measures the impact of COVID-19 on consumers, found that 82% of South Africans remained financially impacted by the pandemic. Only 12% of consumers indicated their household finances were as planned in 2020, while 69% said their finances were worse than planned.

“Access to credit is fundamental to a strong and growing economy, and too many South Africans are currently credit invisible,” said Rall. “CreditVision Link can help open the door to financing homes, cars, education and other necessary credit products, while fueling our country’s economic engine.”

TransUnion estimates that nearly 26% of the adult population in South Africa is not able to access credit because they have never built a credit history by leveraging a financial product**. Many of these individuals have jobs, homes and other records of financial responsibility, and lenders need greater insights to better serve them and advance them credit that can lead to a higher quality of life.

“Based on our initial validations, CreditVision Link would be able to accurately score as many as an additional 8 million South African consumers, who otherwise would be returned as no-hit or thin file by traditional models and be excluded,” said Rall.

Currently, credit invisible consumers and consumers with little credit data must rely on alternative methods of financial support in lieu of other established credit products and loans. CreditVision Link provides a more holistic picture of a consumer’s ability to manage financial commitments and determines appropriate risk levels, allowing lenders to deliver financial products and credit responsibly without increasing their own risk profile.

“Leveraging alternative data to confidently open the door to thin file and credit invisible consumers has become an essential growth strategy for creditors in a stagnant market, while maintaining the ability to grow their books responsibly,” said Rall.

One way that CreditVision Link analyses consumers is by examining data such as property information, commercial links, family construct, and where they live. While these aren’t typically considered credit offerings, they help lenders gauge whether that consumer has been financially responsible and has the ability to maintain payments. It also enables lenders to better distinguish between high risk and subprime consumer segments to identify opportunities in previously grey areas.

“At a time when the entire South African economy is suffering from the COVID-19 crisis and subsequent recession, we need every tool at our disposal to contribute to lifting many South Africans out of financial hardship and creating a stable path toward an economically prosperous future for the country,” said Rall.

For more information on CreditVision Link or to get in touch, CLICK HERE

* Online survey of 1,100 South African adults conducted 1-3 December 2020.

** 2020 analysis of TransUnion’s credit database and wider population data.