From Pymnts · PYMNTS · · 1m 40s
Affirm's new underwriting sees credit history clearly
Affirm's transformer-based model approves borrowers traditional credit scores would reject, including those with thin files and no FICO score.
In brief
Affirm's transformer-based model approves borrowers traditional credit scores would reject, including those with thin files and no FICO score. By analyzing patterns in credit data over time rather than compressing history into a single score, Affirm approves more eligible borrowers while maintaining risk discipline…
Affirm launches transformer underwriting model
Affirm's new real-time underwriting model is now live at U.S. checkouts. It learns from patterns in credit history rather than relying on a single credit score.
Built on 14 years of transaction data
The model was trained on 14 years of Affirm's transaction-level lending data. It identifies patterns within and across credit accounts, including how they change over time.
Approves borrowers previous system declined
The model approved eligible applicants Affirm's existing system would have rejected, including consumers with thin credit files and no FICO scores at all.
“Seeing a credit history more clearly means we can responsibly say yes to more people.”
Results beat previous expansion efforts
The new approvals generated 3.4% more completed purchases than a control group, at comparable risk levels. Loans performed better than similar expansions under Affirm's previous models.
Saying yes requires getting better at saying no
Affirm built a proprietary algorithm that explains the model's decisions while keeping it fast enough for checkout. The goal is right decisions per transaction, not approving everyone.
“The goal isn't to approve every transaction, it's to make the right decision for each one.”
Customers using Affirm for everyday purchases
Affirm processed 53 million transactions in fiscal Q4, up 41% year over year, while average order value fell 4%. Transactions per active consumer rose 20% to 7.0 over 12 months.
Model widens access to everyday financing
More frequent, smaller transactions show consumers using Affirm as a regular payment method. A model that approves more eligible borrowers expands who can access this option.
The key point
By analyzing patterns in credit data over time rather than compressing history into a single score, Affirm approves more eligible borrowers while maintaining risk discipline.
