No rating, no credit

By Rob Dorscheidt

1 in 6 UK adults struggling with debt worries. 1 in 4 single parents in the UK are living with problem debt. Debts are a big issue, according to the UK Money Advice Service.

Financial stress

With an all low interest rate and even negative interest rates, due to the policy of the European Central Bank, it will boost a multi-trillion global lending market. Consumer credit rises at fastest pace for 11 years in the UK; the new unsecured lending to UK consumers climbs £ 1.9bn in March 2016. This can be extremely dangerous on the long term, for both consumers and lenders. An interest rate rise of 1% will cause £ 1000 additional costs any month for an average household. This will lead to more financial stress in the upcoming years when interest rate will go up again. And they will, someday.

The underserved

On the other hand: billions of people globally are underserved, e.g. students, millennials, SME’s and young entrepreneurs. They don’t have access to any form of lending, because they just don’t have a credit history. OECD recently concluded that more diverse forms of financing are needed. No rating, no credit? It’s time for a change, a responsible change.


FinTech plays a key role, makes the breakthrough with a disruptive impact. Artificial intelligence and machine learning helps financials to serve the underserved. By combining ubiquitous structured and unstructured big data, machine learning technologies make it possible to rate the underserved. Yesterday, only dull financial metrics were used to rate customers’ credit worthiness. Today and tomorrow, engagement from the consumer to his credit score and the use of behavioural data – e.g. mobile phone usage or the web footprint – are perfect indicators of responsibility and credit worthiness.

Let’s go serve the underserved!


Added May, 27th 2016

3 great reads on credit rating (via Letstalkpayments):

  1. Will Instant Credit Take Over Credit Cards?
  2. Alternative Credit Score: There is More Than FICO
  3. FICO Score Is Under Real Threat