Alternative Credit Scorer Aire Heads to North America

© Can Stock Photo Inc. / IrochkaThin file? No problem.

U.K.-based alternative credit-scoring engine Aire is heading to Canada next month, and to the U.S. a few months after that, CEO Aneesh Varma told Bank Innovation this week. Aire provides lenders with data on thin-file borrowers, whose age, work history, or place of residence may have limited their credit history.

Aire launched across the pond in Jan. 2014, and has secured approximately $1.4 million in funding to date. The company participated in the Barclays/TechStars Accelerator last year, and its proprietary Aire score is used by major credit card companies as well as student lenders.

“The traditional Fico format has gaps for first-time borrowers — self-employed, foreign, or young people,” Varma said. “At the same time, credit scores are being used more widely than was ever imagined when Fico was introduced in 1956. It’s now used for car insurance, by rental companies, for brokerage accounts, leasing. We’re stretching Fico, and cracks are appearing.”

To make up for Fico’s deficits, Aire looks at “more facets and more dimensions, across more axes, and is more holistic” than the Fico scoring model, Varma said. “Marginalized borrowers, and lenders looking to engage with them, simply do better through the Aire process.” It’s personal for Varma — when he moved to the U.K. from the U.S., he found that his American credit history, solid as it was, was useless to British lenders. Many expatriates can tell the same story.

Online loan approval may seem like a dicey proposition to traditional lenders, but Varma said Aire conducts “virtual interviews” with potential borrowers that replicates what a human interviewer might do — with the added benefit that its algorithm can’t be socially engineered as a human can.

“One day we’d like to be behind mortgages,” Varma said. “That’s the big prize.” But the company will build up to that with credit cards and auto loans, and work in the insurance space, he said.

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