A new service from credit reporting agency illion allows financial institutions to better scrutinise customers' transaction data.
The new 'Transaction Risk Score' more closely scrutinises cash use patterns, income frequency, and loan repayment trends, and forms part of the wider comprehensive credit reporting method.
One red flag identified in the new transaction score is a customer on a prepaid phone plan, according to illion's Head of Modeling Barrett Hasseldine.
"For a consumer to be given a post-paid mobile service, they must have successfully passed a credit history check," he told Savings.com.au.
"As such, individuals with bad credit histories disproportionately use pre-paid mobile phone plans."
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
Lender | |||||||||||||
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| Variable | More details | ||||||||||||
| FEATUREDUNLIMITED REDRAWSSPECIAL OFFER | Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)
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Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)
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| Variable | More details | ||||||||||||
| FEATURED100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES | Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)
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Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)
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| Variable | More details | ||||||||||||
| NSW/VIC/SA METRO & INNER REGIONAL AREAS | Variable Home Loan (Principal and Interest)
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Variable Home Loan (Principal and Interest)
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| Variable | More details | ||||||||||||
| REFINANCE ONLY | Variable Rate Home Loan – Refinance Only
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Variable Rate Home Loan – Refinance Only
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| Variable | More details | ||||||||||||
| NO ONGOING FEESFREE REDRAW FACILITY | Live-in Variable Loan (Principal and Interest) (LVR < 90%)
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Live-in Variable Loan (Principal and Interest) (LVR < 90%)
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- Fast turnaround times, can meet 30-day settlement
- For purchase and refinance, min 20% deposit
- No ongoing or monthly fees, add offset for 0.10%
Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 25, 2022. View disclaimer.
Another red flag identified includes customers withdrawing large sums of money via ATM on payday, which could indicate spending on gambling and other vices.
"The score identifies individuals who are withdrawing cash at ATMs on payday and reduces their score as a result. If the individual transfers money to a different bank account electronically, their score is unaffected," Mr Hasseldine said.
illion CEO Simon Bligh called the new transaction score a "game changer".
"Banks and credit providers hold a raft of data that shows both the financial state and spending behaviour of their customers. What the score does is mine this data and make sense out of it in a straightforward manner," he said.
“An example of an insight we have developed is that there is a strong correlation between an individual’s risk and the amount of their salary they pull out of the ATM on pay day.
"We have developed thousands of these insights."
The new transaction score forms part of illion's open banking rollout, in which the agency is one of the few institutions to be granted data accreditation.
Mr Bligh also said the transaction score can also lead to cheaper home loans.
“There are upsides for consumers as well as credit providers, with the key insights needed to unlock more tailored lending terms and conditions and a broader range of products through enhanced credit underwriting and more suitable loan pricing," he said.
“This is good for financial institutions who can price more efficiently, lend more responsibly and do so at lower cost, and it is good for consumers who will have an expanded choice and get the products that are right for them, quickly.
"It’s one of those rare innovations where everybody wins."
Photo by Tim Mossholder on Unsplash
