FinRegLab, a Flourish partner, has issued one of the first ever public evaluations of cash-flow data—variables and credit scores that are derived from bank account records and other sources—as a potential alternative or supplement to using traditional credit scores in underwriting credit for consumers and small businesses. The report, The Use of Cash-Flow Data in Underwriting Credit: Empirical Research Findings, can be found here.

The study, which analyzes data from six nonbank financial services providers, found compelling evidence that the cash-flow variables and scores tested were predictive of credit risk and loan performance across the diverse set of companies, populations, and products studied.

“Millions of consumers and small businesses struggle to achieve access to credit in today’s markets,” said FinRegLab CEO Melissa Koide. “These results suggest that cash-flow data may provide an important part of the answer.”

Today’s credit markets depend heavily on information provided by credit bureaus to underwrite consumers and small businesses. But an estimated 45 to 60 million consumers lack sufficient credit history to generate reliable credit scores, and millions more struggle to access affordable credit because their scores are too low. The lack of easy access to reliable underwriting information also makes it hard for business start-ups to obtain loans.

Read the full study and findings here.