Fintech startup, TomoCredit has launched TomoScore to businesses. It describes the solution as an innovative cash flow-based credit score that provides lenders a risk-free way to identify high-quality borrowers with limited or no credit history.

TomoScore is an underwriting model that utilises real-time, cash-flow based performance data as an alternative to traditional credit scores. It monitors the cash flow attributes of those considered credit invisible. This includes new US citizens without prior credit history, small and medium-sized business owners, students, and other young adults who demonstrate sound financial practices. TomoScore says it gives lenders a proven method to evaluate and acquire mid- to high-income borrowers while keeping default rates better than industry averages.

62 million US consumers have thin credit files or no credit history

More than 62 million Americans have thin credit files or no credit history at all. This makes it difficult to secure loans from lenders. Lenders historically rely on consumer credit scores from FICO and other credit reporting bureaus to identify eligible candidates. FICO scores are calculated using a mix of data including payment history, amounts owed, length of credit history, new credit, and credit mix obtained strictly from credit files. According to TomoCredit, the traditional method ignores a borrower’s real-time cash flow data. This means that credit-worthy, high-income individuals with no credit score could have their application declined by lenders.

Identifying high-quality borrowers even if they lack a traditional credit score

“Our current credit bureau system is outdated and prescriptive. It presents large hurdles for millions of consumers,” said TomoCredit founder Kristy Kim.

“I experienced this difficulty firsthand when as an immigrant and a recent college graduate with no credit history, I had to pay cash for a car because I faced multiple auto loan rejections. While I was fortunate enough to have the funds to make that purchase, not everyone is in the same financial situation. TomoScore solves that problem by providing lenders with a way to identify high-quality borrowers, even if they lack a traditional credit score. It evaluates real-time cash flow attributes that other credit rating methods overlook.”

According to TomoCredit, it offers a first-of-its-kind fintech product that gives lenders years of proprietary performance data. It says it provides a full financial picture. This includes on-time payments for bills, regular income, monthly rent payments, and investments of potential high-quality lenders who lack a traditional credit score. This allows financial institutions to make credit more accessible to worthy borrowers without added risk.

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