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Thin file no more!

5th June 2017

Today is a big day for me, and it is appropriate that this is my first ever Linked In article. Today marks the third anniversary of the day I packed my bags and upped sticks from Dublin to London. This has come around far quicker than I expected, and, to be honest when I moved I only ever intended to ‘do’ three years here, but here I am – still going strong.

The three-year anniversary is quite a big one for my fellow ex-pats here as it marks the date when we can FINALLY apply for credit with any real chance of success! Before now, I’ve been classified, in my mind incorrectly, as being a “thin-file.” In the common tongue, this means that the relevant credit bureaux here in the UK do not hold enough data about my financial history to return a thick file to lenders, insurers or anyone else who asks for it, in this case, due to less than 3 years address history.

What happens when a lender’s decision engine gets a thin-file back from a bureau? Its algorithms crunch some numbers, and it spits out a decision: thin-file = no credit. It is quite literally a case of “COMPUTER SAYS NO”.

Of course, there can be some situations where it is perfectly acceptable for the computer to say no, for example where the applicant’s historical data indicates a pattern of default, or an inability to meet repayments on time. However, my challenge is far more basic.

As it stands for people like me, we can’t even get that far into the process, because most of the credit application forms require a three-year address history to do the search.

So the applicant is left with a choice – abandon the application? Or say that they have lived here for more than three years? Well-intentioned applicants may be tempted to do just that and stretch the truth about their circumstances. While this, of course, is never acceptable, the fact that otherwise honest people can be driven to such lengths shows how inefficient the system is. This may apply to something as mundane as trying to get a mobile phone or broadband contract.

Three years ago I was amazed at how difficult it was to do simple things like open a bank account. I’m fortunate in that both companies I’ve worked for in the UK have been very diverse places with lots of nationalities represented.

I was a part of a big hiring drive at Zopa, my first employer in London, and there were four others facing the same challenge as me: “how do we open a bank account?’. Luckily for me (and credit to them), HSBC were excellent. They understood the problem and managed to work through it. However, one of my colleagues, a fellow Irishman, was not so lucky with another bank and described the process as like ‘pulling teeth.’

Hitting the three-year mark is great as I am now past the first hurdle and can apply. And as I’ve managed to get some credit over the course of the last three years and I managed it responsibly, my credit file should have lots of lovely data so from now on things should get easier. But I have to ask, why have I had to wait three years? Why all the hoops I had to jump through?

In Ireland, I had a credit card from the age of 18. I’ve had a car loan, which I repaid two years early. I’ve had overdrafts, phone contracts and more. Why, when I moved less than 300 miles across the Irish Sea, did this data disappear? I appreciate that Ireland does not have exactly the most developed credit bureau in the world but still, I think it’s a valid point.

So what can be done to help the ‘new-to-country thin-files’? Fortunately, I can directly help fix this problem. I get to do something that can make this better.

Coremetrix has proven that there is a link between someone’s personality and their credit intent. By marrying an innovative visual quiz with a robust, statistical model, we can add a lot more data to allow a lender to make a decision.

There are a lot of people out there who are highly qualified, in good jobs, with good salaries and who would be worthy borrowers but as they are new to a country and have no historical data, computer says no!

In the Coremetrix world, the first computer (using the historical data) can say no. But it will then refer the applicant to undertake the psychometric assessment. Once Coremetrix computes a score, it’s then returned to the lender, and they can make a new decision.

Maybe it will still be a no for some, but many more deserving people will get a yes!

Critically, we have proved that we can do this without increasing the default rate in the portfolio and that the psychometrics-accepted population would perform in line with, or in some cases outperform their thick-file counterparts.

My thin-file experience was in the UK, but we can deploy our product anywhere in the world.

We have working models in the UK, Slovakia, Poland, Turkey, South Africa, India and are developing them in many more new territories. We localise the quiz to account for language, culture, sensitivities and understanding of imagery. The models are built for specific regions accounting for the target population.

There are many more use-cases, and we have a mission to bank the unbanked, but today especially I am reminded of the challenges of being new-to-country and a thin-file! But change is possible! It’s something I feel very passionate about, hell it’s why I joined the company! Can we get credit? To quote Barack Obama – “Is feider linn!


Conor Redmond

Head of Operations