A firm which credit scores people based on data available online has launched in London.
Big Data Scoring, which was founded in Finland three years ago, assesses credit worthiness using free data. The firm started using Facebook before branching into other free data sources.
The firm’s chief executive Erki Kert claimed lenders will be able to use the service to end “luddite banking”.
He said credit scoring millennials and non-UK nationals is tricky for lenders who often get it wrong and either offer too little or too much credit. The former means missed opportunities for institutions, while the latter can expose them to bad debt.
Kert said: “Banks and lenders in the UK have a duty to lend responsibly and sensibly, yet they can’t always do this because many are still relying on outdated systems of credit scoring. In essence this is luddite banking, despite financial institutions having more data at their fingertips than ever before.
“Too much credit is a consequence of the current failings when it comes to credit scoring young people and highlights the need for action to ensure people are given what they need but also what they can afford.”
A YouGov report commissioned by Big Data Scoring found that a third of people under 30 (33%) don’t know what a credit score was.
Kert added: “Young people have come into adulthood with an almost immediate online presence, unlike previous generations.
“We have seen this can be as much, sometimes more, of a barometer of their creditworthiness as the traditional approach applied to older people.
“Increasingly, banks are starting to use this alternative source of information to support with their credit checking; it should eventually become an industry standard.”