Feds Are Open to Use of ‘Alternative Data’ in Loan Reviews

The video discusses the Federal Reserve's encouragement for lenders to use alternative data to assess creditworthiness, especially for those without traditional credit histories. It highlights the potential benefits of improved credit access and the risks, such as privacy concerns and algorithmic bias. The discussion includes examples of alternative data, like bank balances, and the competitive landscape among banks. The importance of data quality is emphasized, with a warning that poor data can lead to poor outcomes.

What is the significance of the Fed's statement regarding alternative data for lenders?

How might alternative data help consumers who lack a traditional credit history?

What concerns are raised about using non-traditional data sources like LinkedIn for creditworthiness assessment?

Discuss the potential risks associated with algorithmic bias in lending practices.

What does Elizabeth Warren suggest about the quality of data used in models for lending?