Affirm’s New AI Model Finds More Borrowers It Can Say ‘Yes’ To
By CU Today Staff —
SAN FRANCISCO—Affirm has rolled out a new real-time underwriting model that is approving some consumers its previous models would have declined—including shoppers with limited credit histories and no FICO score—while reporting better loan performance, according to PYMNTS.
PYMNTS reported the transformer-based model is now live at U.S. checkouts and builds on Affirm’s practice of underwriting each purchase individually in real time. In its initial deployment, the model generated 3.4% more completed purchases compared with a control group by approving additional eligible applicants, while those loans performed better than a comparable expansion using Affirm’s previous machine-learning models.
“Seeing a credit history more clearly means we can responsibly say yes to more people,” Affirm President Libor Michalek told PYMNTS.
According to PYMNTS, the model uses existing credit bureau information—including balances, utilization, account counts and payment histories—but is designed to identify additional patterns within and across consumers’ accounts and how those patterns change over time.
“What’s exciting about the transformer model architecture is that we can now find new information within the data we already have,” Michalek said. He stressed the technology is not intended simply to increase approvals: “The goal isn’t to approve every transaction, it’s to make the right decision for each one. We don’t benefit from extending credit that can’t be repaid, which means saying yes to more people only works when we get even better at saying no.”
The technology comes as consumers are using Affirm more frequently and for smaller purchases, PYMNTS reported. Affirm processed 53 million transactions during its fiscal fourth quarter, up 41% year over year, while gross merchandise volume increased 36% to $14.1 billion and average order value declined 4%. Active consumers increased 21% to 27.8 million, while transactions per active consumer rose 20% to 7.0 over the trailing 12 months—trends PYMNTS said point to Affirm increasingly being used for everyday purchases rather than only occasional big-ticket financing.
Originally reported by CU Today.