Challenger credit bureau Credit Kudos has announced the releases of 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.
Imran Gulamhuseinwala OBE, Trustee of the Open Banking Implementation Entity (OBIE), said “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.”