In daily life, borrowing money may be unavoidable for many people. For different amounts and purposes, they may eventually be “forced” to borrow. However, borrowing is not an easy matter for many, and that’s why this article is written: to offer a fresh perspective on credit scoring, which often becomes an obstacle for individuals trying to obtain a loan.
Credit scoring is often a “boogeyman” for borrowers, and with over 1.5 billion people without bank accounts, many of whom also represent a potential market, every business looking to grow expansively must adapt to what’s called “alternative credit scoring.”
This is a credit evaluation method that considers more aspects, not just credit scores, rent payment data, and similar factors. Other aspects considered can vary, such as telecommunication data, e-commerce data, and even utility payment history. Aspects beyond credit scores can be used to assess prospective borrowers more objectively because a person’s financial discipline can indeed be assessed based on their digital footprint.
In real-life cases, lenders might engage with customers without bank accounts but with minimal risk of breaching agreements. By adopting alternative credit scoring, lenders can expand their business reach, thus increasing profits. In 2025, alternative credit scoring might be one of the most important financial trends that no business owner should ignore.
A Game Changer for Borrowers
In reality, the alternative credit scoring system is a game changer for borrowers. This system bases its evaluations on a broader understanding of a person’s financial discipline. A person’s financial discipline can be assessed from more aspects, and the easiest way to do this is by “researching” their digital footprint.
There are many non-traditional sources that can be used to describe a digital profile, and those with low credit scores, such as rural farmers, students, and immigrants, still represent a potential market as long as they fundamentally maintain financial discipline. This more comprehensive scoring system is undeniably a game changer for borrowers because they now have more opportunities to obtain loans. Rather than relying on traditional credit scoring based on banking transactions and credit cards, they now have multiple aspects to highlight as reasons why they should be granted a loan.
In fact, there are plenty of data sources that can be used to analyze a person’s eligibility for a loan based on the alternative credit scoring system. Some of these are: Mobile spending history; Borrower’s residential area; Utility bill payment history; Social media friendship networks; And online purchase history.
How It Works
How does alternative credit scoring work? It’s actually quite simple, as it generally revolves around three important aspects:
Willingness: A person’s willingness to pay installments (even if smaller than the expected amount over the same period) should still be appreciated, as it shows a desire to repay the loan, even if they are currently facing some difficulties. People like this are a potential market, and when trusted, that’s when they strive to maintain that trust. They don’t always stay in the “lower economic zone.” Life’s cycles change, and while they might be “down” today, one day they could be “up.” That’s when they will increase their loan amounts, as they’ve had positive experiences before.
Ability: Financial ability is an important aspect of the evaluation because this world is built not just on ambition and ideas but also on reality. A borrower might have a strong will to pay installments, but if their income is too low for the amount of money they borrowed, problems will eventually arise. That’s why financial capability must be carefully considered, as it also determines whether the loan (and its interest) will be repaid in the end. Tracking someone’s online spending history is one way to assess their financial ability to qualify for a loan of a certain amount.
Financial Stability: Some people have income that fluctuates significantly month by month. Sometimes they earn a large sum, but the following month they have no income at all. Even if they have the will and financial ability (for a period), overall, they are not recommended to receive a loan, because payment failure is only a matter of time. People with unstable financial conditions should be avoided by any lender. To assess a person’s financial stability, you can investigate their social media network, as those with unstable finances often display certain similar characteristics.
What Can Be Concluded?
Alternative credit scoring can open more opportunities for borrowers, and if they have some positive financial habits, such as paying mobile operators on time, paying utility bills on time, and having a “positive-looking” social media environment, they may be considered for “easier terms.” From the lender’s perspective, the presence of AI and advanced risk management tools can make it easier for them to assess someone’s eligibility for a loan by basing their evaluation on more aspects beyond traditional criteria, such as banking credit history.
