Bloom Credit

We are excited to announce our new relationship with Taktile! As financial services products and financial data become more complex, it’s critical to have a partner that excels in modern risk decisioning. Taktile brings just that with its next generation platform. We are thrilled to help provide their lending customers with fast and accurate credit data in order to make more informed credit decisions quickly. Read more here: https://lnkd.in/eFxbycjC

Credit models are only as good as the data they are built upon. As consumer financial behaviors and the lending industry at large evolve, a need to standardize and expand that data has become clear. New data sources like rent and utility payments, along with innovative credit products, offer a chance to modernize, but inconsistent data reporting is holding the industry back. Without change, consumers face inaccurate credit assessments, and lenders miss opportunities. Bloom aims to fix this by driving collaboration and standardization across the industry. Our platform connects key stakeholders—lenders, bureaus, and data furnishers—making credit data more transparent and fair, ensuring everyone has equitable access to credit in a future-proof system. The time for transformation is now, but it will require participation from all stakeholders. Will you join us? https://lnkd.in/g9ptCCu2

Our CEO, Christian Widhalm, recently joined Peter Renton for his Fintech One-on-One podcast to discuss what's happening today in credit data and how Bloom Credit is helping its customers solve the problem of expanding access to affordable credit for more consumers. https://lnkd.in/gbcf8ZBt

Gen Z is grappling with significant economic challenges. Over the past decade, they've faced a 32% cumulative inflation rate, reducing the real value of their incomes compared to Millennials at the same age. The traditional credit and lending systems fail to reflect modern financial behaviors, further complicating their financial struggles. Gen Z also prefers avoiding traditional debt, increasingly opting for credit tools like Buy Now, Pay Later (BNPL), which offer more flexibility and convenience. However, payments made through these modern credit options are not captured in conventional credit scoring models, suggesting a disconnect between current consumer credit behaviors and outdated scoring systems. As a result, financial institutions are in an effective stalemate: They struggle to lend to consumers deemed uncreditworthy by traditional scoring models, which were not built for the nontraditional financial habits of younger generations. Without access to credit, this group cannot enhance their credit profiles enough to access mainstream credit products.  Now what? Now, financial institutions must embrace alternative, consumer-permissioned data to make better-informed, nuanced credit decisions. Financial institutions must recognize the urgency of integrating comprehensive data to make more intelligent lending decisions in a customer-centric way. Their bottom line depends on it…and so do Gen Z and future generations of consumers. Learn more in our latest post on Medium: https://lnkd.in/eA_XGeKa

Credit reporting agencies are crucial to the US financial system and in shaping consumers' financial futures, but they often face criticism for inaccuracies, delayed updates, and miscommunications in credit reports. These issues can lead to denied loans and increased interest rates, frustrating consumers. Over the last five years, complaints have surged, with 1.3 million in 2023 alone, up from just 154,500 in 2019, according to the CFPB. How are credit scoring models evolving to address these challenges? While traditional models like FICO Score 8 remain vital, alternative scoring methods are being adopted to help lenders reach underserved consumers. Read more about the data in the article below: https://lnkd.in/eZpbfnB3

Credit unions face significant challenges that threaten their growth and sustainability. The average credit union member is now in their mid-50s, and less than 20% of Americans under 40 use credit unions. Attracting Millennials and Gen Z is crucial to ensuring long-term viability. However, attracting a broader consumer base – inclusive of younger generations – requires a formidable lending strategy built on more robust credit data. The path forward is clear but demanding. Credit unions must embrace inclusive lending and compliant technology that allows them to fulfill their mission while staying competitive with national banks and emerging fintechs. While it’s true fintech companies pose a formidable threat with their tech-first approach, credit unions can access a wealth of data on their members – data that their competitors lack. Allowing members to opt-in to send this data to the bureaus enables credit unions to help their members while helping themselves. Members – many of whom may have thin or no credit files – can enhance credit profiles with payments data tied to rent, utilities, and other relevant indicators of creditworthiness. In other words, credit unions can simultaneously help their own members build credit while being first in line to offer them personalized credit and lending offers. All of this happens within the digital “walls” of the credit union, allowing it to retain sovereignty over members while fulfilling its core mission. The ability to be more surgical with lending and credit products poses a significant opportunity for growth. By leveraging consumer-permissioned data (CPD), credit unions can gain deeper insights into their members' financial behaviors, enabling the creation of personalized products that address the specific needs of younger generations. CPD helps build comprehensive customer profiles, facilitating accurate credit assessments and better risk management. So, while credit unions face substantial challenges, these obstacles also present opportunities for innovation and growth. Embracing digital transformation, leveraging community strengths, and utilizing CPD can help credit unions thrive in a competitive market, ensuring they meet the evolving needs of the modern consumer. Below are more insights we share in our latest article: https://lnkd.in/gacxUA4F

We're excited to share that Bloom Credit won Tearsheet's 2024 Data Innovation Award! The ability for consumers to demonstrate creditworthiness in new and different ways is more important than ever, and we're proud to have been recognized for our efforts with this award. https://lnkd.in/gwCB_cdA

Credit bureaus and BNPL providers are at an accidental stand-off, and consumers are stuck in the crossfire. Lenders are taking hits, too. The problem is that legacy credit reporting and modeling systems face limitations with new and alternative credit products that inhibit the types of data used to assess creditworthiness. Conventional data pools are not truly accurate (or thorough) assessments of a consumer’s ability to pay. What’s more, furnishment practices aggravate the problem as many furnishers don’t report to all three bureaus, leading to credit data gaps and inconsistencies. BNPL credit data is a major wrench in existing credit data reporting gears – gears that are already a bit rusty. Since BNPL data is nuanced and falls outside of conventional data, the bureaus struggle to integrate it, and current credit models don't necessarily consider it either. Even if those hurdles were surmountable, the furnishment inconsistency issue would still pose a problem. The result? Consumer credit files do not accurately assess or present true creditworthiness. For lenders, this means an absence of information that inhibits their ability to assess risk accurately. For consumers, it means a lack of access to mainstream credit and rates. It’s time for a unified approach that supports comprehensive data integration, robust verification processes, and compliance with consumer privacy laws. Read our latest article for more insights on how to solve the problem: https://lnkd.in/er7zUnuG

Financial fragmentation, where individuals maintain multiple financial accounts across various institutions and fintech platforms, poses significant challenges for traditional banks. Younger generations, in particular, exhibit less loyalty to any single financial institution, making it crucial for banks to find innovative ways to attract and retain these customers. A recent survey highlights that 56% of Americans have accounts across multiple banks, with Millennials and Gen Z being the most likely to switch providers. This behavior results in data silos, where each institution only has a partial view of a customer's financial health, making it difficult to offer personalized services, especially to the credit invisible who lack the traditional credit data it takes to have a sufficient credit profile. Banks now have the opportunity to address both challenges with consumer-permissioned data (CPD). On one hand, API-enabled CPD helps banks empower consumers to share payments data that can boost their credit health. On the other hand, that financial institution is able to retain and grow that relationship, leveraging the more accurate risk assessments alternative data facilitates to offer personalized credit products to consumers they otherwise might not be able to serve. Bloom's consumer-permissioned data solution offers a robust response to the challenges of financial fragmentation. Banks can enable their customers to opt into the service, selecting which monthly payments they’d like to include in what gets furnished to credit reporting agencies. This helps build more accurate credit profiles, allowing banks to offer personalized products based on a holistic view of the customer's financial behavior. By leveraging CPD, banks can retain sovereignty over their customers while helping them build credit, competing more effectively in a crowded landscape. Embracing CPD is not just a tactical move; it's a vital strategy for building stronger, more resilient relationships with the next generation of banking customers. We appreciate the American Banker for letting us share our full thoughts in this article. https://lnkd.in/eDY-2gnB

Financial institutions face an existential challenge in attracting, retaining, and serving the next generation of customers due to a stark disconnect between perceived and actual service quality. IBM research reveals that while 88% of bank managers believe they understand Gen Z needs, only 34% of those customers agree. The way FIs approach credit data are becoming obsolete, and FIs must swiftly adapt to survive amidst rapid economic and technological shifts. The outdated credit data and scoring models that FIs rely upon are becoming increasingly misaligned with today’s rapidly shifting market demands. Subsequently, they restrict opportunity and inadvertently disadvantage consumers, especially those from emerging generations who often lack extensive (or any) credit histories. Our recent article makes a compelling case for why lenders must urgently revolutionize their approach to data utilization. This new strategy hinges on embracing technological innovations—APIs and alternative credit data sources—which underpin lending innovation. Financial institutions can tap into a richer, more nuanced array of consumer data with this technology, providing a fuller picture of a borrower's financial health and credit potential. It also enables them to furnish that alternative data to bureaus, enriching how credit is scored for consumers. This shift towards a "new data paradigm" is integral to serving future generations. And while financial institutions may feel hindered by compliance mandates and cost, innovative plug-and-play solutions pose a viable solution. These solutions empower their customers to share their data willingly and securely. Such consumer-permissioned data frameworks are compliant and enhance the customer experience by making credit access more personalized and equitable. This is the future of lending and demands that financial institutions adapt swiftly. FIs must leverage these advanced tools to make informed, risk-adjusted decisions that reflect true financial behaviors, fostering a more inclusive financial ecosystem. https://lnkd.in/eZFGfBsW