Moody's, which appears to be farthest along in its plans, is hiring 10 people whose job will be to assist the company's analysts in evaluating creditworthiness, starting with companies that carry large amounts of debt or that have potential accounting issues already identified by the agency, Mr. Jonas said.
Most banks won't touch these kind of loans because they're high-risk, but like On Deck Capital (which is attempting to streamline the lending process for small businesses), LendUp uses Big Data to do instant risk analysis and evaluate creditworthiness, weeding out those who have bad credit for a reason from those who may have become victims of the system.
But on the back end, Affirm has built a new method of evaluating creditworthiness and lending risk that goes well beyond your typical FICO score and could lead to many more financing approvals while also lowering the amount of money consumers pay in interest when financing purchases.
Earlier this year, Accion President and CEO Michael Schlein and Board Chairman Diana Taylor wrote in Forbes about DemystData, a company that uses big data to evaluate creditworthiness.
Institutions provide the data under agreement with the bureaus, in exchange for access to credit files so they can evaluate the creditworthiness of applicants.
As a result, the bureau concluded, consumers shouldn't rely exclusively on those scores to gauge how a lender would evaluate their creditworthiness.
Most often, that means your FICO score — the score developed by the company of the same name to help lenders evaluate the creditworthiness of a potential borrower.
But they remain dependent, fiscally and economically, on the financial success of once-scorned New York City, said Helen Cregger, a vice president of Moody's Investors Service, which evaluates the creditworthiness of local governments.
The admonishment from S.& P. was not as blunt as a warning delivered less than a week ago by Moody's Investors Service, S.& P.'s chief rival in evaluating the creditworthiness of countries and corporations.
During the mid-to-late 1990s, they added flexibility to their underwriting guidelines, introduced new low-down-payment products, and worked to expand the use of automated underwriting in evaluating the creditworthiness of loan applicants.
