The media narrative of these startups is somewhat misleading. It sounds neat to suggest that you can approve loans based on an amalgamation of seemingly random data points, like proper capitalization, but the reality is that even most of the alternative online lenders are using credit scores.

From Affirm's website:

> Affirm does a credit check to verify your identity and provide you with a financing offer when you sign up. This is a ‘soft’ credit check and will not impact your credit score. If you choose to complete a purchase and finance it with Affirm, we will do a single ‘hard’ credit check when your first order is processed by the merchant. This may have a minor impact on your credit score. For future purchases with Affirm we won’t need to check your credit again.

    "It is important to maintain the discipline of not trying to explain too much,” said Max Levchin, chief executive of Affirm. Adding human assumptions, he noted, could introduce bias into the data analysis.

This might be true, but I've heard this mentality before, and I feel like it draws this incorrect picture of completely fair robots scanning the universe of variables. Ultimately it's a [probably-white-upper-middle-class] human who intuits which variables are worth further study.

[probably-white-upper-middle-class]: pick your favorite adjectives to describe startup machine learning engineers.

Kind of weird to have an article about alternative lending and big data, and not mention Lending Club? The are the biggest player in the space by far and IPOed only last month...

Looks like the focus of the article is on alternative techniques to determine creditworthiness. Lending Club, as I understand, relies mostly on traditional credit scores, which does not make them particularly innovative for this particular aspect of lending.

Lending Club is a rounding error compared to the big banks.

And is a marketplace, not a direct lender like the companies mentioned.

By being online/mobile, aren't these companies already cutting out large swaths of the people they ostensibly aim to assist?

Also, another ex-PayPal entrant: Vouch.