What is the focus of the credit score proxy method?

The credit score proxy method focuses on determining interest rates without the actual use of credit scores. This approach is particularly useful in situations where traditional credit scoring may not be available or when consumers do not have sufficient credit history to generate a standard credit score. By utilizing alternative data or proxies, lenders can still assess the creditworthiness of borrowers and establish interest rates that reflect the associated risk.

This method allows for more inclusive lending practices, enabling lenders to serve a broader range of consumers, including those who may be new to credit or have limited credit histories. The use of proxies helps to provide a more nuanced understanding of a borrower's ability to repay a loan, hence facilitating lending decisions based on a more comprehensive picture of the borrower’s financial behavior rather than solely on a numerical score.