That deeper understanding enables lenders to build more resilient businesses while reining in the risks of future losses.

Traditional credit data provides a limited view into a consumer’s financial status and creditworthiness. Prism’s market-leading CashScore harnesses the power of open banking to drastically expand that view, incorporating thousands of financial insights that are vital to evaluating credit risk but missing from traditional credit scores—from income and savings to rental payments and use of emerging forms of borrowing like Buy Now, Pay Later (BNPL) loans.

Measuring a consumer’s income, spending, and savings to determine creditworthiness—a process commonly referred to as “cash flow underwriting”—has previously been a time-consuming and largely manual task. Prism’s CashScore automates the process, simplifying consumer cash flow underwriting to a three-digit score that is reliable, accurate and compliant with lending regulations.

Prism’s infrastructure makes it easier for financial institutions and fintechs to analyze and interpret open banking data so they can understand—with unparalleled clarity—a consumer’s full financial picture. With an expanded universe of fresh, actionable data, clients can proactively improve underwriting strategies, minimize first-party fraud, and better manage servicing of their portfolios.

CashScore v3 is the first-ever consortium-based cash flow underwriting model, built using millions of anonymized, consumer-permissioned records from a variety of different banks, credit products and customer segments. Similar to traditional models like FICO or VantageScore, Prism’s consortium-based CashScore v3 offers lenders a highly predictive tool they can use off-the-shelf to more precisely assess credit risk in any consumer context—from credit cards and personal loans to mortgages and auto loans, among others.

“The best models are based on many observations and diverse data sets,” said Brian Duke, Prism Data’s Vice President of Data Science. “Prism has seen more financial transaction data, over a longer period of time, than any other cash flow underwriting provider. As a result, we’re able to provide a scoring and analytics platform with category-leading reliability and predictive power.”

Since its introduction, Prism’s CashScore has been used to inform more than one billion dollars in real-world credit originations for hundreds of thousands of consumers.

The CashScore is highly predictive, reliably and consistently outperforming traditional credit scores and custom bureau models on a standalone basis, and provides even greater predictability when combined with traditional scores and models. Prism’s CashScore has been shown to reduce expected credit losses by as much as 30%, and increase approval rates by up to 10% without impacting loss rates. The model’s predictive power extends across the entire credit spectrum, from higher-risk consumers with thin credit files and/or subprime bureau scores to lower-risk/prime consumers with thick credit files.

With this new CashScore, clients can:

• Gain new insights and accurately predict credit behavior. The new CashScore enables lenders to more precisely assess a consumer’s current financial condition and ability to repay, incorporating income, savings and spending data that are not available in traditional credit reports. This provides Prism clients with an analytical edge over competitors relying on information that is more limited, stale, and often less accurate. With the CashScore, this comprehensive cash flow underwriting is available in a three-digit score that clients can easily implement into existing loan applications and credit policies.

• Serve new and historically marginalized populations without increasing credit losses. Clients can utilize the CashScore to score millions of consumers who today have no credit score or have thin or stale credit files that do not accurately reflect their true financial health. Prism clients can accurately assess the creditworthiness of non-traditional borrowers and expand access to credit among historically underserved populations and low-risk “Invisible Prime™” consumers - who lack a traditional bureau score, but whose cash flows demonstrate underlying financial strength and ability to repay.

• Precisely identify likelihood of overdraft or default. The new CashScore delivers a holistic understanding of each consumer’s current ability to repay, enabling clients to detect subtle changes in a consumer’s finances that could signal impending financial distress and more accurately predict the likelihood of overdraft or default.

• Reduce risk from first-party fraud. Prism’s CashScore helps clients detect signals and patterns in transaction data that are highly predictive of first-party fraud, which is typically difficult to identify.

• Detect hidden financial obligations. The CashScore can surface non-obvious financial obligations—like BNPL, payday and title loans—that are critical to understanding a consumer’s leverage and debt-to-income ratio but which don’t show up in traditional credit bureau data.

• Quickly react to changes in existing portfolios. The new CashScore provides a leading indicator that helps companies more quickly detect—and proactively respond to—changes in a consumer’s income or ability to repay. Clients can use the CashScore in tandem with Prism’s Insights product to detect changes in income, savings, and spending that are indicative of risk well before those changes are reflected on a consumer’s credit report.

The new CashScore is part of a larger suite of Prism Data products that provide the infrastructure clients need to benefit from open banking. These include:

• Categories, which enables clients to categorize consumer bank account transactions into more than 30 categories, including BNPL and rent;

• Insights, which enables clients to take categorized bank account transactions and distill them into more than 15,000 different types of consumer financial insights, including BNPL, title and payday loans); and

• Income, which can be used to verify income and help clients understand recent income trends vs. long-term trends.

Clients can use the CashScore off the shelf or, for a more customized solution, in combination with Categories, Insights and Income. Clients can also use Prism’s products in combination with traditional credit bureau data and their own proprietary models, enabling them to lend with much greater confidence and much less unexpected risk.

Prism’s CashScore enables regulated financial institutions to make credit more accessible and inclusive without sacrificing transparency or fairness. Prism has purpose-built its products to comply with the FCRA, fair lending and all other applicable laws and regulations. Similar to traditional credit scores, the CashScore rank-orders a consumer’s risk of default, returning not only a score but a list of explainable Reason Codes for potential use in clients’ Adverse Action Notices.

The early model underlying the CashScore was developed by Prism’s sister company Petal, which pioneered the use of cash flow underwriting in consumer credit. Last year, Petal spun Prism Data into a standalone company focused on the B2B market.