CA 19-11: Interagency Statement on the Use of Alternative Data in Credit Underwriting

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CA 19-11: Interagency Statement on the Use of Alternative Data in Credit Underwriting

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D.C. 20551

DIVISION OF CONSUMER AND COMMUNITY AFFAIRS

CA 19-11

December 12, 2019

TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK

SUBJECT:

Interagency Statement on the Use of Alternative Data in Credit Underwriting

Applicability: This statement applies to all institutions supervised by the Federal Reserve, including those with $10 billion or less in consolidated assets.

The Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency have issued the attached interagency statement on the use of alternative data in underwriting by banks, credit unions, and non-bank financial firms. This statement is focused on consumer protection implications of the use of alternative data in underwriting, highlighting potential benefits and risks.

The statement notes the benefits that using alternative data may provide to consumers, such as expanding access to credit and enabling consumers to obtain additional products and more favorable pricing and terms. The statement also explains that a well-designed compliance management program provides for a thorough analysis of relevant consumer protection laws and regulations to ensure firms understand the opportunities, risks, and compliance requirements before using alternative data.

If you have any questions concerning this letter, please contact Westra Miller, Counsel, Fair Lending Enforcement, at (202) 452-4251. In addition, questions may be sent via the Board’s public website. 1

signed by Carol A. Evans Associate Director Division of Consumer and Community Affairs

Attachments:

Interagency Statement on the Use of Alternative Data in Credit Underwriting

Notes:

See

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Last Update:

December 12, 2019