What happens when 5 million* UK residents can’t access mainstream credit?

The problem is bigger than you might think. These ‘credit invisible’ individuals – from freelancers to those new to the country – often have thin credit files that don’t reflect their true financial capability. For you, this creates a frustrating paradox: potential customers with solid financial foundations but insufficient data to prove it.

Enter Open Banking data. Visibility into real-time transaction histories, income patterns and spending behaviour, offers deeper insights into financial health than traditional credit files ever could. 

In this blog, we’ll cover how leveraging Open Banking data can address the thin credit file challenge, improve lending strategies, and expand access to credit for those who need it most.

Why traditional credit files aren’t telling the whole story

Limited credit history creates a challenge: how do you accurately assess applicants when traditional credit data is scarce? Here’s what typically causes thin credit files:

• • Non-traditional income sources: The rise of gig economy workers, freelancers and self-employed individuals has created income patterns that traditional credit scoring models struggle to assess accurately.

• • Limited credit interaction: Whether by choice or circumstance, a significant portion of individuals lack traditional credit footprints, from new market entrants to those who actively avoid credit products.

• • Economic volatility: Market disruptions can create temporary gaps in credit profiles that mask underlying financial stability.

The limitations of traditional credit reference agency data exacerbate this issue. These data sources primarily rely on historical credit activity, leaving significant gaps in understanding a borrower’s real-time financial situation. This creates some real challenges:

• • Misjudged affordability: Over-reliance on historical credit data leads to both missed opportunities with creditworthy applicants and potential misreading of risks.

• • Hidden financial stressors: Key indicators like BNPL usage and subscription commitments often fall outside traditional credit assessments, leaving important aspects of financial health unexplored.

• • Unaccounted spending patterns: Regular small expenses, such as subscriptions or frequent overdraft usage, which may indicate a lack of financial buffer, are often missed by static credit reports.

• • Lagging financial indicators: Delays in capturing real-time financial changes, such as a sudden job loss or unexpected medical expenses, leave firms making decisions based on outdated information.

This is where Open Banking data comes into its own. It provides that missing piece of the puzzle – a real-time view of financial health that goes beyond traditional credit scores.

How Open Banking data enhances thin credit files

Here’s a reality of modern lending: while traditional credit data tells an important historical story, it’s only part of the picture. AperiData leverages Open Banking data to complete this picture – delivering real-time financial insights that traditional assessments simply can’t capture.

Here’s what makes it particularly powerful:

• • Real-time insights: Instead of waiting for traditional credit reports to update, you can see financial health as it stands today – not last month.

• • Accurate income verification: Open Banking finally solves a persistent challenge for those with variable incomes: it captures the true stability of irregular earnings that traditional models often misinterpret.

• • Detailed spending patterns: From BNPL commitments to spending trends, Open Banking spots the nuanced indicators of financial health that traditional reports miss.

• • Proactive risk identification: Spot potential issues before they become problems – whether it’s increasing credit reliance or sudden income changes.

• • Inclusivity for underserved groups: Rather than excluding capable borrowers due to thin files, Open Banking provides alternative ways to demonstrate creditworthiness.

Let’s break down exactly how Open Banking compares to traditional credit data:

	Traditional credit data	Open Banking data
Data recency	Relies on historical data, updated every 30-45 days.	Provides real-time insights into current financial behaviours.
Income verification	Limited to static records (e.g., payslips, tax returns).	Shows actual income patterns for customers.
Spending patterns	Minimal insight into day-to-day spending habits.	Offers detailed breakdowns of all spending, including BNPL reliance and overdraft use.
Affordability assessment	Focuses on historical debt repayment behaviour.	Includes recurring expenses, income stability, and financial resilience metrics.
Risk identification	Misses emerging risks due to outdated information and reporting lag.	Identifies sudden financial changes (e.g., income drops, increased credit reliance).
Inclusivity	Excludes many thin-file applicants, gig workers, and credit avoiders.	Provides data to assess underserved groups fairly.

By combining historical credit context with Open Banking’s real-time insights, you’ll get what you’ve always needed: a complete view of borrower risk that’s both accurate and current.

The result? Fairer, more informed credit decisions while reducing risks and expanding access to underserved demographics.

How banks and other lenders are using Open Banking data

Open Banking data enhances lending decisions throughout the credit lifecycle. Here’s how firms are putting it to work:

#1. Assess gig workers and freelancers 🎤

Firms can evaluate irregular income streams and spending behaviours to assess the financial stability of gig workers and freelancers accurately. Open Banking data reveals patterns that static data often misses, such as consistent income despite variability or prudent financial habits.

#2. Support new-to-credit customers 🆕

Transaction data provides insights even when credit history doesn’t exist. Firms can assess spending patterns and affordability to offer appropriate starter products, from first credit cards to small personal loans.

#3. Manage risk proactively ⏩

Open Banking data allows firms to identify early warning signs, such as increased reliance on BNPL services or overdrafts. By spotting these trends in real-time, firms can intervene before customers face financial distress, offering alternative repayment options or adjusted terms.

#4. Enhance collections strategies ✋

For customers in arrears, transaction data reveals current financial circumstances, enabling more realistic and sustainable repayment plans. This improves both recovery rates and customer relationships.

#5. Strengthen affordability assessments ✅

Open Banking data goes beyond traditional metrics to include recurring expenses like rent, utilities, and subscriptions. This comprehensive view ensures that lending decisions are based on a borrower’s true financial capacity.

#6. Tailor credit offerings 💳

Real-time financial data enables firms to design products that match customer needs, with features like flexible repayment schedules or credit limits based on actual affordability.

These applications show how Open Banking data is helping firms make better decisions while expanding credit access responsibly.

Why leading firms partner with AperiData

AperiData unlocks the full value of Open Banking data, helping firms make smarter, faster decisions. Here’s why we stand out:

Granular data insights

Our Open Banking solutions deliver a detailed analysis of transaction patterns, income stability, spending behaviours and risk flags. This depth of insight supports better lending decisions across the credit lifecycle.

Bank coverage

Securely access connections to the UK’s largest financial institutions via a single API.

Consent managed

Our fully brandable consent framework allows your customer to easily and securely grant access to their financial data.

Simple API integration

Our API integrates effortlessly into your existing systems, providing real-time insights without disruption.

Faster access to data

Our API delivers compliant Open Banking data and insights in real-time, so you can stay ahead of the curve.

Consultative approach

But we don’t just provide data, we work alongside you to make the most of it. Our experts have over 100 years of combined experience in credit risk, having worked at the big CRAs and data providers. We understand your specific lending challenges and help build solutions that fit your existing workflows.

Regulated CRA status

Our status as a regulated credit reference agency and Open Banking provider means we meet the highest compliance and accuracy standards. Our ISO 27001:2022 certification guarantees your data is handled with the utmost security, adhering to FCA security principles. You can trust our insights to support responsible lending.

Build better credit decisions

Open Banking insights from AperiData gives you a comprehensive, real-time picture of your customers’ financial position. Here’s what you can access:

✅  Customer accounts: Identify balances, overdraft usage, and direct debits.

✅  Liabilities: Track credit product usage and repayment trends.

✅  Transactions: Analyse spending habits and trends across periods.

✅  Income: Verify income sources, type, and stability with our proprietary models.

✅  Expenditure: Categorise spending to refine affordability assessments.

We’ve designed our solutions to help you confidently serve gig workers, freelancers, and thin-file customers. You can expand credit access while maintaining robust risk assessments.

To sum up: Working with AperiData gives you the expertise, technology, and data you need to make better lending decisions and grow your business responsibly.

Solve thin credit files with AperiData

Limited credit history doesn’t have to mean limited lending options. AperiData’s Open Banking solutions provide the real-time insights you need for fairer, more accurate decisions – whether you’re assessing gig workers, supporting new-to-credit customers, or managing risk proactively.

Want to see how AperiData can help your business tap into these opportunities? Contact us to learn more or book a demo.

Sources: https://www.experianplc.com/newsroom/press-releases/2022/meet-the-5-million-credit-invisible-brits-still-at-risk-of-exclusion-from-the-financial-system