McDonough School of Business
McDonough School of Business
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Georgetown Study Reveals Potential Credit Resolutions for the Unbanked and Underbanked

WASHINGTON, D.C. – The Psaros Center for Financial Markets and Policy at Georgetown University’s McDonough School of Business announced a new study revealing potential credit resolutions for the unbanked and underbanked.

The use of alternative data sources, such as bank account information, a consistent history in paying rent and utilities, and short-term loan and payroll history in calculating credit scores could lead to significant benefits such as improved access to borrowing funds and lower fees for loan products, according to a new study from Marshall Lux, a visiting fellow at the Psaros Center, and Jack Zoltak (B’25), a co-author and research assistant.

Typically, credit scores have primarily focused on more traditional borrowing products such as credit card payments and mortgages. However, Lux explains that this method neglects the needs of populations that require financial assistance.

“The global financial system has evolved rapidly in recent decades,” said Lux. “But access to financial services remains a major challenge for billions of people around the world, even in our current age of digitization.”

Approximately 13% of adult Americans are underbanked, and 6% are unbanked, according to data from the Federal Reserve System. Another issue, as identified by the Consumer Finance Protection Bureau, is the prevalence of so-called “thin files” and “credit invisibility” among segments of the population. This limited history inhibits credit access and may negatively impact the cost of available lending products, potentially placing individuals into a cycle of poor credit and lower quality of life. The addition of alternative data to credit files can help address this.

The paper, Alternate Data in Credit Underwriting: Potential Resolutions For the Unbanked and Underbanked, specifically recommends the following:

  • Allow consumers to choose whether or not to include non-standard data to determine credit through the use of opt-in and opt-out services.
  • Experiment with pilot programs to live-test new regulations.
  • Provide incentives for lending businesses to furnish data to credit bureaus with a focus on smaller, non-prime entities.
  • Establish nationwide data privacy laws to protect consumers from data breaches and malicious business practices.
  • Digitize all credit information so it can be shared efficiently and at a low cost between relevant entities.

About the Psaros Center for Financial Markets and Policy

The Psaros Center for Financial Markets and Policy addresses the urgent financial markets issues of today – and informs the future of global finance. Based in Washington, D.C., at Georgetown University’s McDonough School of Business, the Psaros Center brings together industry practitioners and policymakers through nonpartisan, solutions-driven platforms. 

The Psaros Center has a legacy of impact – from its origins following the 2008 financial crisis to its ongoing expertise in financial markets, disruptive technology, and corporate governance. The Psaros Center produces vital thought leadership: conducting original research, sharing its learnings widely, and teaching the next generation of finance and policy leaders. For more information on the Psaros Center, please visit the website: finpolicy.georgetown.edu. Follow us on X @GUFinPolicy

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