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Credit Kudos Introduces New Credit Risk Score

Learn how Credit Kudos Uses Open Banking data to predict how liquid an individual will be in the future with its new ‘Liquidity Score’ metric.

by Phoebe Allen8th October 2019

Credit Kudos recently announced their newest credit risk scoring metric, the ‘Liquidity Score’. Using Open Banking data, the newly introduced Liquidity Score predicts how liquid an individual will be in the future, i.e. the likelihood an individual will remain above £0 or above their unarranged overdraft across all bank accounts. The Liquidity Score supports a holistic affordability decision taking into account an individual’s current financial situation and their likely future trajectory. It aims to both protect individuals against financial distress and provide lenders with richer insights into the financial prospects of borrowers. This is just the latest example of Open Banking technology helping consumers get better outcomes using the latest technological innovations.

Imran Gulamhuseinwala OBE, Trustee of the Open Banking Implementation Entity (OBIE), commented: “We are delighted to see how companies like Credit Kudos are using Open Banking technology to deliver products and services that help consumers better manage their finances. Open Banking’s secure APIs enable lenders to make enhanced affordability checks — mitigating the risks of financial distress and making a real difference to the financial well-being of millions of consumers.”

To build the Liquidity Score, Credit Kudos analysed hundreds of thousands of transactions, using advanced modelling techniques to uncover trends and patterns highly predictive of future outcomes. The Liquidity Score encapsulates two years of complex financial patterns in one interpretable number to help lenders more accurately assess affordability to prevent financial distress for those borrowers who have a likelihood of being less liquid in the future.

Credit Kudos offers three Liquidity Scores: 30 days, 90 days and 180 days. Each represents the likelihood that the applicant’s account balance will remain above zero — or above their unarranged overdraft, if an arranged overdraft is present — within the given time period. For example, if an applicant’s “30 Day Liquidity Score” is 90, we predict that it is highly likely that a borrower’s balance will be above zero (or above their arranged overdraft) within the next 30 days.