Hello, and welcome back to Source of Truth, the new podcast miniseries from Fintech Takes, sponsored by our friends at SOLO.

This series is about information asymmetry (the enemy of financial services; especially lending).

In Episode, we tackled truth vs. trust. And in Episode 2, we explore history vs. overconfidence, which goes something like this:

In 1995, Fannie Mae and Freddie Mac effectively mandated the use of FICO scores in mortgage underwriting. Almost overnight, credit scores went from a niche tool in bankers’ back rooms to the market’s law of the land.

Joining me to unpack that history and its consequences is Martin Kleinbard, Founder of Granual Fintech (and author of the great research report How Cashflow Data Can Diffuse the Credit Score Time Bomb, which I was proud to publish at Fintech Takes).

Highlights include:

What began as an additive tool for underwriting quickly became a substitute for judgment (lenders skipped the W-2s and leaned entirely on the number)

The three pillars of credit: Willingness to pay (FICO’s wheelhouse), ability to pay (cash flow, income, assets), and product risk (loan terms that can themselves trigger default) – the financial crisis showed what happens when you ignore the latter two!

Second-order risk today. From BNPL quirks to payment hierarchy surprises (why personal loans sometimes get paid before mortgages), context still matters more than any one score

This episode explores what happens when we reduce everything to a single number: lenders miss nuance, consumers get misread. A credit score can predict repayment, but only context explains it.

And in the end, context is king.

Subscribe now and catch the rest of Source of Truth … we’re just getting started!

This miniseries is brought to you by SOLO.

SOLO resolves and connects customer data across silos — so teams stop rekeying the same customer info for the hundredth time and finally move forward.

Break the cycle at SOLO.one - That’s SOLO dot o-n-e.

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And for more exclusive insider content, don’t forget to check out my YouTube page.

Follow Alex:

YouTube: https://www.youtube.com/channel/UCJgfH47QEwbQmkQlz1V9rQA/videos

LinkedIn: https://www.linkedin.com/in/alexhjohnson

Twitter: https://www.twitter.com/AlexH_Johnson

Follow Martin:

LinkedIn: https://www.linkedin.com/in/martin-kleinbard-6122aa1a/

We also chat about his new piece in Open Banker (on AI for consumer bankers), which you can read here: https://openbanker.beehiiv.com/p/aiforconsumerbankers

Learn more about SOLO here.

Ep. 053: Rachael Wants to Know What Next?