JPMorgan Chase & Co, Wells Fargo , U.S. Bancorp and other banks plan to share data on customers’ deposit accounts to extend credit to people who have traditionally been barred from getting them, the Wall Street Journal reported.
The plan, part of a government-backed initiative, will factor in information from applicants’ checking or savings accounts at other financial institutions to increase their chances of approval for getting credit cards, the report said on Thursday, citing people familiar with the matter.
The move is aimed at customers who do not have credit scores but are financially responsible, the report said, adding that the lenders would consider applicants’ account balances over time and their overdraft histories.
The banks are discussing using credit-reporting firms, such as Equifax, Experian PLC and TransUnion , as well as fintech company Early Warning Services LLC, for this data sharing, the WSJ report said.
The new plan marks a significant contrast to the strategy generally adopted by lenders, who traditionally rely on credit scores to determine eligibility for a loan. Reforming credit scores is one of U.S. President Joe Biden’s many priorities as he tries to repair the financial wreckage caused by the COVID-19 pandemic.