Castlight Financial has launched CastScore, defined as the “world’s first open-banking affordability score”, which provides access to borrowing for people with “thin credit files”.

The new affordability score, CastScore, could help up to 5.8 million people in the UK access borrowing, the company said. Users can demonstrate creditworthiness and eliminate their dependence on credit history.

Castlight Financial is an award-winning Fintech company which has developed a broad range of digital affordability tools in the past.

Previously, the company launched its Affordability Passport, which enables customers to stream their bank transactional information with their credit report – providing retailers with real-time, detailed insights into a customer’s financial capability.

Castlight CastScore

CastScore, the company claims, is powered by AI technology that validates actual loan performance data. User information is also supplemented by expert analysis of spending trends with high street banks.

This information is then merged with transaction analytics, sourced from up-to-the-minute reviews of the customers’ actual income and spend, as well as a more complex analysis of lifestyle and discretionary spending.

The technology is being piloted by three of the UK’s high street banks in an effort to help customers augment and improve their credit scores. Castlight Financial said it is already developing CastScore to “provide the banks themselves with a significant competitive edge in a busy marketplace.”

Phil Grady, CEO of Castlight Financial, explained: “CastScore looks at and categorises every debit and credit and so it allows us to fill in the gaps in traditional credit data reporting and give customers, particularly those with thin files, a chance to be fairly assessed.

“Traditional credit scoring focuses on the consumer’s future credit behaviour being similar to their past performance by looking at historic credit reference agency data. The CastScore creates an up to date view of a consumer’s available disposable income and is able to predict future payment performance using more recent and relevant data.”

Grady said the technology “could be the difference” for “financially cautious” people with little credit history aiming to secure a mortgage.

“For a financially cautious millennial with little credit history but enough money in the bank,” he said. “CastScore could be the difference between securing a mortgage or being stuck in the generation rent trap.”

He added: “For the first time someone with a thin credit file will be able to demonstrate, not only that they have a regular income coming in, and that they are financially robust, but they will be able to show a set of exemplary financial behaviours which make them a very good credit risk indeed.”

Identifying Risk

Although it is primarily aimed at people with poor or ‘thin’ credit files, CastScore could enable a wider demographic, the company said.

A predictive CastScore somewhere in the middle of the range, Grady explained, could be used to “augment” a traditional credit score and “radically improve it.”

He said: “If traditional credit scoring provides a snapshot of a customer’s affordability, CastScore provides a 3D movie. That means that any bank offering CastScore to customers is going to be able to use the enhanced modelling system to identify risk more accurately and ultimately offer better credit terms.

“Credit risk teams will also be able to use CastScore for ongoing control and monitoring of customers’ finances, providing an early warning system of potential problems and allowing them to update their risk models and limits if needed.”