New ways for credit scoring looking more at likelihood to repay vs historical facts. In Benign environments all rating systems work...so we will know in 5-10 years which model was really resilient
Credit records are not the only test of sound borrowers. AMERICAN banks typically drum up new borrowers by bombarding anyone with a decent credit score with junk mail offering credit cards and ignoring everyone else. A host of new competitors, however, are much more imaginative about how they recruit new customers. Take Kabbage, a startup based in Atlanta which began lending to small companies online in 2011. A third of their applicants did not qualify for business loans because they had not yet started operations, had insufficient revenue or no formal legal structure. Many of them, however, did qualify for personal loans. So in September Kabbage launched a subsidiary called Karrot to give personal loans of up to $30,000 at interest rates of 6% to 26%.