Many potential borrowers look good on paper and are classified as creditworthy, but are in fact risky
. This is because traditional methods can give credit to consumers who, e.g., have a large number of reward credit cards but sign for them to get bonuses (the so-called “card churners”), and are not, in fact, profitable for the issuer.
On the other hand, many of those who could turn out to be creditworthy get rejected by the traditional credit model. This can be caused by factors like payment history, types of credit used, and recent credit inquiries. Therefore, it will deny credits to consumers without a good credit history, no matter what is their actual current situation.