Can your mobile phone data be used for credit scoring?


Usually, when an individual wishes to apply for a loan and buy a property, the ususal process is to review bank statements, expenses and salaries. However, this is not possible for around  two billion people all over the world, who do not have bank accounts and therefore no access to funding.

María Óskarsdóttir"The traditional method of assessing credit does not work for everyone," says Dr. Maria Oskarsdottir, Assistant Professor at Reykjavik University´s Department of Computer Science. Maria came to RU after having been a  post-doc at KU Leuven University in Belgium for a few years where she also completed her PhD. "I am a good example, actually! I don´t have the files needed to complete the traditional assessment as I have just moved back."

During her PhD studies she researched the use of phone data for credit scoring. By using their phones, people generate behavioural data. "This is so-called CDR data (Call Detail Records) which phone companies access to calculate your use and send you a bill, how many calls you make, etc. How you use your phone says a lot about you as a person." 

The data showed us when people are calling, on which days, how many different contacts, and how often. This is the complex net of variables used and what we discovered is that they are just as good for determining the credit scoring for an individual as the traditional way.

Using these networks, the characteristics of people that are in contact with potential borrowers could be ascertained. In particular, whether they had late payments.

Credit Scoring for GoodFjártækni

With the research, Maria aims to adapt the service from banks and other financial companies to everyone, no matter which social group they belong to and where they live.

But does this not raise questions regarding privacy? "Yes, that is a very common question!" Users need to give permission for the use of their mobile phone data, something that is a prerequisite. The term used for this process is "credit scoring for good", and there is potential here for a service for those who need it.

"In my case, if this was being utilised in banks in Iceland I could have sent them permission to use my phone data so that my credit scoring could be assessed before I moved here."