Mastercard and Equifax Australia Introduce 'Open Score' with the Aim to Enhance Financial Accessibility
In the ever-evolving world of finance, Equifax, a leading global data, analytics, and technology company, has introduced a groundbreaking credit score product: Equifax Open Score. This innovative solution aims to revolutionise the credit industry by utilising bank transaction data to produce a cash flow-based credit score.
Equifax Open Score enhances credit underwriting by analysing actual bank account activity and cash flow, rather than relying solely on traditional credit history. This approach enables a more accurate risk assessment, especially for consumers with thin or no credit files, the unbanked, or those with irregular income streams.
The new credit score product expands access to credit for underserved or non-traditional borrowers by incorporating diverse financial behaviours such as income, spending, expenses, savings, obligations, buy-now-pay-later usage, gig work, and rental payments into the scoring process.
One of the key benefits of Equifax Open Score is the delivery of a simple, three-digit risk score (CashScore) that closely predicts credit risk across all consumer segments, from subprime to super-prime. This score provides around a 30% improvement in predictive power over traditional credit scores alone.
Equifax Open Score integrates seamlessly into lenders’ existing systems through Equifax platforms, enabling scalable and seamless use for a variety of lenders including banks, credit unions, fintechs, and non-bank lenders. The score also offers explainable adverse action reason codes when used for credit decisions, supporting regulatory compliance and transparency.
Brenton Charnley, vice president of Open Banking at Mastercard, supports the statement that Equifax Open Score empowers Australians to use their own data more easily and securely. Equifax Open Score utilises secure consumer-consented bank transaction data obtained through the Consumer Data Right (CDR).
The first product from the collaboration between Equifax Australia and Mastercard is Equifax Open Score, a bank transaction score designed to support consumers with limited or no credit history. This innovative solution helps individuals understand their financial position and promotes greater financial inclusion.
Equifax Open Score provides insights into a consumer's income, expenses, and spending patterns. It assesses a consumer’s financial health in real-time and provides a score between 0-10. Consumers have full control over their data with Equifax Open Score, and sharing only happens with their explicit permission.
Moreover, Equifax Open Score offers transaction alerts to help consumers identify unusual or fraudulent transactions. It also aims to improve financial literacy, help manage budgets, and make more informed borrowing decisions for Australians.
Melanie Cochrane, chief executive officer of Equifax A/NZ, states that Equifax Open Score will empower more Australian consumers to manage their financial health actively. Equifax Open Score will be particularly beneficial for consumers who have historically had limited access to credit.
In summary, Equifax Open Score aims to deepen credit insights through bank transaction and cash flow data, improve credit decision accuracy and inclusiveness, serve consumers underserved by traditional credit scoring, and integrate seamlessly within existing financial institution workflows to support responsible lending and financial inclusion.
- Equifax Open Score, a collaboration between Equifax and Mastercard, utilizes consumer-consented bank transaction data to provide a simplified credit risk score (CashScore) for a more accurate risk assessment.
- The new credit score product, Equifax Open Score, looks at actual bank account activity and cash flow to enhance credit underwriting for various consumer segments, including those with limited or no credit history.
- Integrating Equifax Open Score into lenders’ existing systems allows for seamless use by banks, credit unions, fintechs, and non-bank lenders worldwide.
- Equifax Open Score offers insights into a consumer's income, expenses, and spending patterns, while also providing transaction alerts to help identify fraudulent activities.
- By integrating diverse financial behaviours such as income, spending, expenses, savings, obligations, buy-now-pay-later usage, gig work, and rental payments into the scoring process, Equifax Open Score aims to improve financial literacy, budget management, and informed borrowing decisions.
- Brenton Charnley, vice president of Open Banking at Mastercard, and Melanie Cochrane, chief executive officer of Equifax A/NZ, support the notion that Equifax Open Score empowers consumers to manage their financial health actively and promotes greater financial inclusion.
