Introducing Consumer Report: Making better credit risk decisions with Plaid

Jonathan Gurwitz

Jonathan is our Credit Lead at Plaid helping customers incorporate cash flow data to make smarter risk decisions.

Today, we’re excited to announce Consumer Report, a new solution that brings businesses real-time, actionable cash flow data along with credit risk insights through Plaid Check, our consumer reporting agency (CRA).

Built on Plaid’s expertise as a pioneer in bank account connectivity, Consumer Report provides lenders, property managers, and buy now pay later providers real-time visibility into a borrower’s finances, along with signals only made possible through our vantage point as the leading open banking network.

While traditional credit bureau data isn’t going away, there’s much more to someone’s story than just their credit score.

By sharing their cash flow data, including income, expenses, and the stability of their bank balances, consumers can tell a more complete story of their finances whether they’re applying for a loan or looking to rent an apartment. Lenders agree: in our survey of 400 lending professionals, 83% are open to using new forms of credit data, most of which are cash flow related. 

How it works

With Consumer Report, companies can now embed cash flow data and credit risk insights directly into their underwriting and verification workflows with a single API.

This includes:  

• Comprehensive cash flow data to see a borrower’s full financial picture: Customers get up to 24 months of consumer-permissioned bank account data through the Plaid network, with categorized inflows and outflows and balance trends. For ongoing servicing needs, get up-to-date consumer reports to better support borrowers, raise credit limits, or stay ahead of repayment challenges.

• Income insights to verify ability-to-pay: Customers can save time and money by streamlining debt-to-income calculations and income verification with insights across over a dozen categorized income streams. These insights include historical and forecasted net and gross income, employer name, and projected next paycheck date so businesses can make smarter credit risk decisions.
  

• Default risk predictions to estimate the likelihood of repayment: Customers can estimate someone’s likelihood of repaying a loan or other financial obligation (such as rent, point-of-sale financing, or cash advances) using cash flow risk scores. But unlike a traditional credit score based on tradeline repayment history, these scores are calculated using deposit account transaction data. Plaid Check has partnered with PrismData, the creator of these scores, to offer consortium-based, market-validated scores and attributes through a single integration and API call. 
  
  

Through that consumer-permissioned bank connection, customers can also automate other critical workflows during and post-credit decision, whether that’s preventing fraud by verifying the account owner’s identity or setting up an account for loan disbursement and payments.

Our customers typically have two main goals in today’s credit environment: they want to expand access to qualified applicants based on net positive cash flow, regular rent payments, and stable employment. And they want to ensure their applicants have the ability to repay the loan using real-time signals of cash flow health, such as the stability of their bank balances or income. In many cases, these signals are not captured by other credit bureaus, but through Consumer Report, our customers get these critical insights instantly.

Whether they’re startups or scaled enterprises like H&R Block and its banking partner Pathward®, N.A., customers across industries are implementing Consumer Report to power their businesses.

A look ahead

We’re hard at work making Consumer Report more impactful for your business, including: 

• Model enhancements and advanced cash flow insights: Our insights continuously improve thanks to machine learning models operating on the largest open banking network in the U.S. We’re also building new cash flow attributes to help lenders better predict short- and long-term credit risk. 

• Network-based insights: Our customers want differentiated signals that are orthogonal to traditional credit scores. We are currently testing hundreds of attributes looking at account connection activity across the Plaid network as predictors of credit risk.

We’re also excited about what this means for consumers, who can now tell the story of their financial lives beyond what’s on traditional credit reports.

The future of lending is one that expands access for businesses and consumers alike through real-time, actionable cash flow insights – and we can't wait to build it with you. 

Check out Plaid Effects for more on Consumer Report and a deep dive session to answer all your questions.