The concept of creditworthiness has long been tied to traditional markers—bank accounts, credit card histories, and formal employment records. But in countries where a significant portion of the population remains underbanked or informally employed, these conventional indicators fall short. This has prompted a shift in how we evaluate financial trustworthiness, especially in emerging economies.
Traditional Credit Scores: Built on Exclusion?
In many parts of the world, traditional credit scoring systems rely heavily on a narrow set of data. Individuals without access to credit cards, stable jobs, or bank accounts often find themselves labeled as “unscored” or “high-risk” by default.
This creates a cycle: people without credit history can’t access credit, and without access, they can’t build a history.
But what if there were other ways to assess a person’s reliability—ways that reflect real-world behavior, not just financial records?
Enter Alternative Data
Alternative data refers to any non-traditional data source used to assess credit risk. This might include:
- Mobile phone usage
- Utility payment patterns
- Social media activity
- E-wallet transactions
- SIM registration and telco behavior
These data points can paint a surprisingly accurate picture of an individual’s financial behavior, offering insight into their consistency, responsibility, and stability—without requiring them to be part of the formal banking system.
The Case for Telco-Based Credit Scoring
One of the most promising forms of alternative data is telco data. In countries with high mobile penetration but low formal banking access, mobile usage patterns serve as a proxy for financial behavior.
For example:
- Long SIM ownership may suggest stability.
- Regular prepaid top-ups indicate consistent cash flow.
- Device change frequency might reflect disposable income levels.
By analyzing such patterns, telco-based systems offer a new, data-driven approach to scoring that includes the previously excluded.
Bridging the Gap Between Technology and Financial Inclusion
The power of alternative credit scoring lies in its ability to bring more people into the formal economy. Small business owners, freelancers, gig workers, and even students—groups often invisible to traditional scoring models—can now be evaluated more fairly.
This shift is particularly significant in the credit score ph ecosystem, where financial inclusion is a national priority. By using technology to interpret everyday behaviors, lenders can unlock new markets, and borrowers gain access to loans, insurance, and other financial products that were once out of reach.
Challenges and Considerations
Of course, alternative scoring isn’t without its challenges. Questions about data privacy, consent, and transparency must be addressed. Users must be informed about how their data is collected, analyzed, and used. Likewise, scoring models must be continually tested and updated to avoid biases and ensure fairness.
But as the digital economy grows, so does the potential to innovate. By combining ethical data practices with intelligent modeling, alternative scoring systems can help build a more inclusive and resilient financial future