TransUnion (NYSE: TRU) announced the acquisition of FactorTrust, a provider of alternative credit data, analytics and risk scoring information that empowers lenders to make more informed decisions, and increases financial inclusion to a wider population of consumers.
The acquisition reinforces TransUnion’s position as a provider of consumer reporting models that capture a wide range of positive payment behaviors. The addition of FactorTrust’s short-term and small dollar lending data to TransUnion’s suite of credit solutions gives lenders the information they need to offer responsible borrowers a broader range of credit products, supported by TransUnion’s robust data security, technology and customer service infrastructure.
Short-term and other small dollar loans are the largest category of consumer credit obligations not currently part of nationwide credit reporting agency databases. In many cases, historically underbanked consumers have selected short-term loans because an insufficient credit history left them with few options. The breadth of data offered through TransUnion’s purchase of FactorTrust will provide lenders with a more comprehensive view of consumers’ financial obligations and payment performance, expanding consumer choice.
“Access to credit is the building block of a strong American middle-class economy,” said Jim Peck, TransUnion’s president and chief executive officer. “With the acquisition of FactorTrust, we will be able to capture a wider variety of positive data that can be a stepping stone to building consumers’ credit profiles, helping people access credit and, ultimately, improve their standard of living.”
Adding small dollar loan data to its credit reporting framework also positions TransUnion to help customers streamline compliance with the Consumer Financial Protection Bureau’s new small dollar lending rule. The rule is designed to protect consumers from securing short-term and balloon-payment loans without the ability to repay according to the terms of the agreement. With visibility into consumers’ traditional and alternative credit obligations, TransUnion will be able to provide all of the data lenders need to comply.
TransUnion has a long history of market innovations that promote financial inclusion. A pioneer in trended data, TransUnion’s CreditVision Link Scores are the only scores in the market that combine directional trended data and alternative credit data, such as payment history and small dollar lending. CreditVision Link Scores allow lenders to score over 60 million more people versus traditional models, and are proven to accurately score more than 90% of applicants typically returned as no-hit or thin-file. FactorTrust’s short-term and small dollar loan data extends this inclusiveness.
“FactorTrust is a strong addition to TransUnion’s business,” said Steve Chaouki, executive vice president of TransUnion’s financial services business unit. “FactorTrust’s approach to complete tradeline reporting aligns with TransUnion’s business model, and the inclusion of more alternative data in financial institutions’ credit and underwriting decisions will enable our customers to better segment risk, allowing them to serve a broader set of customers across the credit spectrum.”
“Joining TransUnion is a great match for FactorTrust,” said Greg Rable, of FactorTrust. “We share a commitment to serving consumers and customers with the highest ethical and compliance standards. Our products complement TransUnion’s slate of online and batch solutions, and our combined data will expand options for consumers and lenders.”
The acquisition closed on November 14, and financial terms were not disclosed.
About FactorTrust: Since 2006, FactorTrust has provided the alternative credit data, analytics and risk scoring information that lenders need to make informed decisions about the consumers they want. The company is relentlessly dedicated to “more” through proven analytics and clean credit information that provides lenders opportunities to grow revenue, meet compliance regulations and serve consumers looking to build better lives with more credit options. The Atlanta-based company utilizes an internal team of predictive analytics experts and statisticians combined with a deep, proprietary database of underbanked consumer loan performance and best-in-class data sources.
Source: TransUnion Press Release