Plaid Introduces Credit Risk Score Based on Real-Time Cash Flow Data

Plaid has introduced a credit risk score that it said provides lenders with an up-to-date view of borrower risk by using real-time cash flow data and unique account connection insights from the Plaid Network.

The new Plaid LendScore provides a more complete financial picture by accounting for variable income, fluctuating expenses and financial activity that is spread across multiple platforms, the company said in a Wednesday (Oct. 15) blog post.

Plaid LendScore is now available in beta, and the company has posted a waitlist for those who want to join, according to the post.

Michelle Young, credit product lead at Plaid, wrote in the post that while traditional credit scores still matter, they “rely on historical data.”

“LendScore takes a fundamentally different approach to evaluating credit risk by leveraging cash flow insights, income patterns and financial account connections to reveal a borrower’s real-time financial story,” Young wrote in the post. “This makes LendScore suitable to use alongside traditional scores to enhance credit decisioning.”

To use this solution, a borrower consents to share their bank account data via Plaid Link, and then lenders can call Plaid’s application programming interface (API) to receive a score from 1 to 99, along with adverse action reason codes, according to the post.

In testing, Plaid found that compared to traditional credit data alone, LendScore delivered a 25% lift in predictive performance, per the post. For some subprime and near-prime borrowers, the solution drove a 20% relative risk reduction without reducing originations.

“As open banking continues to scale in the U.S., credit scoring will only get smarter,” Young wrote in the post. “We’ll continue evolving our model to reflect how borrower behavior changes, so you can stay one step ahead of risk.”

PYMNTS reported in June that while Plaid launched 12 years ago primarily as a data connectivity layer that allowed consumers to link bank accounts to FinTech applications, it is evolving into a sophisticated platform focused on enhancing financial analytics and enabling new digital experiences.

Plaid CEO Zach Perret told PYMNTS CEO Karen Webster in an interview posted June 23 that looking ahead five years, he wants Plaid to be known as “the analytics platform for financial services or the data platform for financial services.”

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