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How Goldman Sachs Made More Than $1 Billion With Your Credit Score - WSJ
By LIZ HOFFMAN and ANNAMARIA ANDRIOTIS
April 9, 2017

Goldman bought TransUnion , TRU -0.21% the smallest of the three main credit-reporting firms, in 2012. By the time it went public three years later, TransUnion had become a data-mining machine, gathering billions of seemingly insignificant tidbits about ordinary Americans that it analyzed and sold to lenders, insurers and others.....As Goldman and Advent dug into TransUnion’s business, they found the fastest-growing revenue was coming from the company’s dealings with online lending startups, people familiar with the investment said.

These companies, such as LendingClub Corp. and Prosper Marketplace Inc., were using information from credit bureaus to find and vet potential borrowers. They were increasingly hungry for data that could pinpoint borrowers who traditional lenders might overlook or overcharge.....TransUnion’s new owners doubled down on these clients. They recruited Jim Peck, a big-data enthusiast who had run LexisNexis Risk Solutions, as CEO. He spent his first day in the company’s data center.

TransUnion began appearing at fintech conferences. It rebranded itself with a techy, purposeful vibe, wrapping its initials, a lowercase “tu,” in an @ sign. “We’re not just a credit bureau; we’re a force for good,” chirped a 2015 video.

The company spent heavily on technology and acquisitions. It replaced its old mainframe, a relic from the 1970s, with nimbler systems that allow it to splice information in new ways. It built a new data center and started scooping up small companies with niche data sets.....One acquisition tracks public records to help with fraud enforcement related to online shopping, among other things. Another uses utility payments, cellphone billing records and other data points to identify creditworthy borrowers who lenders might have overlooked, either because they have little or no debt history or potential red flags on their traditional credit reports. ​ ​​ ​​....By the time of its IPO in 2015, TransUnion had 30 million gigabytes of data, growing at 25% a year and ranging from voter registration in India to drivers’ accident records in the U.S. The company’s IPO documents boasted that it had anticipated the arrival of online lenders and “created solutions that catered to these emerging providers.”

Goldman itself is a customer. In 2016, the Wall Street firm launched Marcus to make online personal loans of a few thousand dollars. Its main pitch to borrowers: refinance expensive credit-card debt at lower rates.

Goldman buys the names and credit information of potential borrowers from TransUnion and sends direct-mail and other advertising to them.
Goldman_Sachs  TransUnion  Advent  private_equity  credit_reporting  credit_scoring  Equifax  Experian  data  data_driven  Marcus  subprime  solution-finders 
april 2017 by jerryking
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