A Second Look at Creditworthiness: What Cash Flow Underwriting Sees That Credit Scores Miss
Credit scores remain a cornerstone of consumer lending, but they are, by design, backward-looking. For millions of Americans with steady income and responsible financial habits, a three-digit score can be an incomplete proxy for real-world ability to repay.
That matters because credit is an important tool that helps keep people and the economy moving. It shapes whether people can live their lives the way they choose and whether a household can manage an unexpected expense, keep a car on the road or replace a broken appliance. Those effects extend beyond any one household and add up across local commerce and national growth.
Yet roughly 45 million U.S. adults remain unserved or underserved by mainstream credit. Many have stable incomes, pay their bills, and manage their finances responsibly. Traditional models can struggle to see that clearly when underwriting relies primarily on bureau scores.
Since 2018, Synchrony has been working to modernize that approach by building Synchrony PRISM, a real-time credit decisioning platform that evaluates applications using a broader set of signals. It is fast enough – rendering a decision in under six seconds – to deliver an answer while a customer checks out in-store or online.
One of PRISM’s newest capabilities is cash flow underwriting. When an application requires additional information for approval, applicants may be offered the option to share cash flow data. With the customer’s permission, Synchrony can securely evaluate bank account activity in seconds, providing a current view of income, obligations, and financial stability that can, in some cases, change a decline into an approval.
Synchrony’s approach was recognized by American Banker as an innovation of the year; an acknowledgment of how quickly cash flow underwriting is moving from concept to practical scale.
What cash flow underwriting adds
The credit system is effective at assessing consumers with long credit histories. It is less effective for people early in their credit journey or those whose traditional credit files are thin or nonexistent, especially when their present financial stability is stronger than their bureau score suggests. Credit scores summarize past borrowing behavior. Cash flow signals can show a more current view of ability to repay.
Cash flow underwriting allows applicants to opt in to sharing bank account signals so a lender can better assess creditworthiness. In a retail checkout context, that can include reviewing deposits, recurring obligations, spending patterns, and average balances. These signals can differentiate consumers who share the same score but present very different risk profiles.
“If we don’t have enough information to make a decision based on the data available to us, we give the applicant the option to share their cash flow information,” Axler says. “That added detail can help us understand ability to repay in a way a credit score may not capture.”
Synchrony PRISM: real-time decisioning at scale
Synchrony began exploring cash flow underwriting in 2022 and has since expanded it across its partner network at checkout. This capability sits within PRISM, which is designed to incorporate more signals and deliver decisions quickly when consumers are applying in real time.
“We knew there was a better way to make an underwriting decision by disrupting how we and the industry had traditionally gone about it,” Axler says. “Our premise, which is now a reality with Synchrony PRISM, is more and better data in real-time adds important context in making an underwriting decision.”
Synchrony reviews more than 50 million applications a year through PRISM, with the majority coming during the checkout process across partner locations or online stores. PRISM evaluates an application in about six seconds, drawing on more than 9,000 data attributes.
“When an application is submitted, we have to first determine whether it’s really that person applying for credit, which is an identity and potential fraud problem,” says Axler. “Once that passes, we get to: Is this person creditworthy? How much money can we responsibly loan to them? What type of product do we want to give them?”
PRISM supplements bureau information with additional signals, including Synchrony’s customer history across more than 140 million tradelines, retail partner information, and other indicators. The goal is a fuller picture of the applicant and a more precise view of risk. Now Synchrony is adding cash flow signals at scale across its partner programs.
Project REACh: Evidence that new borrowers can thrive
Synchrony’s early work on cash flow underwriting began in 2022 through Project REACh (Roundtable for Economic Access and Change), a cross-industry effort with the Office of the Comptroller of the Currency to explore how to expand inclusion responsibly, especially for applicants with no credit score.
“The overall industry approval rate for scores under 620 was around 8 percent last year,” says Axler. “So, while some of these people have access, more than ninety percent are being turned away from the financial system even though they may have steady incomes. Our work with Project REACh showed that there is a better approach.”
In the initial phase of the Project REACh program, Synchrony approved nearly 70,000 people for their very first credit line using cash flow underwriting. More than half of those approved moved from no credit score to a prime score within a year. That is evidence that consumers can be evaluated accurately with additional context and brought into the financial system with better rates, lower costs, and access on their own terms.
Why retail makes cash flow underwriting harder, and why that matters
For many lenders, using cash flow data is simpler because they can rely on their own deposit relationships and make credit offers proactively based on the added context. Synchrony’s model requires integrating cash flow signals from a customer’s bank at the point of sale, typically when a consumer is checking out and decides to apply for credit. They expect an answer in seconds.
“We pushed cash flow underwriting to the point of acquisition, typically when a person is completing a purchase and sees an offer to sign up for credit,” says Axler. “We had to figure out how to keep it within our six-second process to not slow down checkout.”
In the past year, about 40 percent of applicants presented with the option choose to share cash flow data, and roughly 40 percent of those applicants are subsequently approved. That represents creditworthy customers who otherwise would have been declined. Synchrony expects to open 150,000 to 250,000 new accounts through this approach this year. Axler notes that to date, these customers are performing in line with the broader portfolio and within the company’s target credit risk profile.
Axler also sees a behavioral effect when underwriting recognizes strength that a score misses. “If a person’s cash flow data tells us that they are more like a 720 score than the 620 score the bureau is reporting, we can give them a higher line and they place more value on the card,” he says. “That helps drive different payment behavior and lower loss rates, which is beneficial to the cardholder and our partners.”
Cash flow underwriting is not a replacement for credit scores, but it is fast proving a strong supplement that can improve underwriting accuracy and expand access responsibly when used with clear consent, strong governance, and rigorous risk controls.
“If roughly 45 million adults are still being missed, the system is falling short and too many Americans are effectively locked out of the financial system,” says Axler. “It’s really expensive to be poor in this country and we want to help change that.”
