What is Alternative data?
Risk
Alternative data are non-traditional information sources —transactional behavior, open banking, device data, telco or utilities— that complement the credit bureau to assess applicants with little or no history. They make it possible to lend to populations traditional scoring can't reach.
Why it matters
In Latin America a large share of the population is new-to-credit or thin-file. Alternative data provide signal where the bureau has none, expanding inclusion without giving up risk control.
- Assess applicants with no bureau history.
- Provide current signal, not just the past.
- Combine with the bureau inside the same policy.
Common questions
Do they replace the credit bureau?+
No: they complement it. The bureau remains the core source; alternative data add signal, especially for thin-file or no-file applicants. A decision engine lets you combine both in a single policy.
Related terms
Champion/Challenger testing
Champion/Challenger is a technique for improving credit policies by routing a share of traffic to an alternative policy (the challenger) and comparing its performance against the one in production (the champion). It lets teams validate changes on real data at controlled risk before adopting them.
Credit scoring
Credit scoring is the technique of assigning an applicant a score that estimates their likelihood of repayment, combining internal data with external sources such as credit bureaus, behavioural data and alternative data. That score feeds the lending decision alongside policy rules.
Roll rate
The roll rate is the percentage of accounts that move from one delinquency bucket to the next over a period (for example, from current to early delinquency, or from 30 to 60 days past due). It measures how fast a portfolio deteriorates, with more precision than the overall delinquency rate.
Back to the full glossary.
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