CFPB Releases Blog Post Favoring Use of Self-Reported Cash Flow Data in Credit Underwriting

On July 27, the Consumer Financial Protection Bureau (CFPB) released a new blog post, positing that cashflow data, broadly defined as the various inflows, outflows, and accumulated amounts in a consumer’s checking and savings accounts, may provide lenders with a better picture of a consumer’s ability to repay their loans than using a credit score.

"The CFPB’s analysis suggests that these three cashflow proxies could be used in combination with credit scores to improve a lender’s ability to predict delinquency," notes League Chief Advocacy Officer JT Blau. "While the CFPB recognizes the limitations of their data – it is a small sample of self-reported data – they use this blog post to encourage other researchers to continue their work and use bank account data and larger samples to further evaluate cashflow as a delinquency predictor. The League will monitor the CFPB’s interest in this research and any possible rulemakings or policy changes that could be proposed if additional research is conducted."