Forget FICO: How Data is Changing the Rules of Credit and Underwriting

March 19, 2013

Summary: Lending firms like Zest and Kabbage are doing a better job than jobs at deciding if a person or small business should receive credit. Their advantage is thousands of data signals that banks don’t even consider.

Until the mid-20th century, a banker’s decision to lend money was based in large part on intuition and relationships. This changed dramatically with the creation of the FICO score — a single metric to decide if anyone was worthy of credit or not.

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