AccountScore and Equifax have today announced the release of a new credit risk index for the consumer lending sector which allows financial institutions to more effectively understand consumers applying for credit products.

The index is based upon the transactional information found within a consumer’s bank account and takes advantages of the opportunities provided by Open Banking to develop new products in order to better understand consumers. The index can be taken as a standalone product or combined with traditional credit risk metrics to provide a fully-rounded understanding of a customer’s affordability and creditworthiness.

The index is the result of over two years of collaboration and analysis by the AccountScore and Equifax analytical teams. It combines AccountScore’s custom built and market leading transaction categorisation engine with the Equifax transaction data behavioural characteristics - identified as being leading predictors of creditworthiness and affordability.

As well as providing financial institutions with more granular insight, the index also outputs 26 indicators which can be displayed back to a consumer to give them an understanding of their rating within the index and the different factors which effect this. This means the index is provided with full transparency and allows lenders to explain their decisions effectively to their end customers.

Emma Steeley, CEO of AccountScore, said: “We are very pleased to release the Financial Health Index to the market. It’s a truly revolutionary product that capitalises on the opportunities provided by Open Banking, both for lenders to gain more insight into their applications but also in allowing consumers to more effectively demonstrate their eligibility for financial products.”

Dan Weaver, Head of Innovation at Equifax, said: “The Financial Health Index is a simple way for lenders to factor into their credit decisions the common payments made by consumers which are not found, or are not always present in a credit report, such as commitments in relation to rent, council tax, utilities and insurance as well as evidencing their income, which will help consumers better demonstrate their affordability and creditworthiness and hopefully lead to more suitable financial products being offered.”

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