Grocery purchase data can accurately predict credit risk for individuals without traditional credit scores, potentially broadening the pool of qualified loan applicants. Photo via Unsplash

Millions of consumers who apply for a loan to buy a house or car or start a business can’t qualify — even if they’re likely to pay it back. That’s because many lack a key piece of financial information: a credit score.

The problem isn’t just isolated to emerging economies. Exclusion from the financial system is a major issue in the United States, too, where some 45 million adults may be denied access to loans because they don’t have a credit history and are “credit invisible.”

To improve access to loans and peoples’ economic mobility, lenders have started looking into alternative data sources to assess a loan applicant’s risk of defaulting. These include bank account transactions and on-time rental, utility and mobile phone payments.

A new article by Rice Business assistant professor of marketing Jung Youn Lee and colleagues from Notre Dame and Northwestern identifies an even more widespread data source that could broaden the pool of qualified applicants: grocery store receipts.

As metrics for predicting credit risk, the researchers found that the types of food, drinks and other products consumers buy, and how they buy them, are just as good as a traditional credit score.

“There could be privacy concerns when you think about it in practice,” Lee says, “so the consumer should really have the option and be empowered to do it.” One approach could be to let consumers opt in to a lender looking at their grocery data as a second chance at approval rather than automatically enrolling them and offering an opt-out.

To arrive at their findings, the researchers analyzed grocery transaction data from a multinational conglomerate headquartered in a Middle Eastern country that owns a credit card issuer and a large-scale supermarket chain. Many people in the country are unbanked. They merged the supermarket’s loyalty card data and issuer’s credit card spending and payment history numbers, resulting in data on 30,089 consumers from January 2017 to June 2019. About half had a credit score, 81% always paid their credit card bills on time, 12% missed payments periodically, and 7% defaulted.

The researchers first created a model to establish a connection between grocery purchasing behavior and credit risk. They found that people who bought healthy foods like fresh milk, yogurt and fruits and vegetables were more likely to pay their bills on time, while shoppers who purchased cigarettes, energy drinks and canned meat tended to miss payments. This held true for “observationally equivalent” individuals — those with similar income, occupation, employment status and number of dependents. In other words, when two people look demographically identical, the study still finds that they have different credit risks.

People’s grocery-buying behaviors play a factor in their likelihood to pay their bills on time, too. For example, cardholders who consistently paid their credit card bill on time were more likely to shop on the same day of the week, spend similar amounts across months and buy the same brands and product categories.

The researchers then built two credit-scoring predictive algorithms to simulate a lender’s decision of whether or not to approve a credit card applicant. One excludes grocery data inputs, and the other includes them (in addition to standard data). Incorporating grocery data into their decision-making process improved risk assessment of an applicant by a factor of 3.11% to 7.66%.

Furthermore, the lender in the simulation experienced a 1.46% profit increase when the researchers implemented a two-stage decision-making process — first, screening applicants using only standard data, then adding grocery data as an additional layer.

One caveat to these findings, Lee and her colleagues warn, is that the benefit of grocery data falls sharply as traditional credit scores or relationship-specific credit histories become available. This suggests the data could be most helpful for consumers new to credit.

Overall, however, this could be a win-win scenario for both consumers and lenders. “People excluded from the traditional credit system gain access to loans,” Lee says, “and lenders become more profitable by approving more creditworthy people.”

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This article originally ran on Rice Business Wisdom based on research by Rice University's Jung Youn Lee, Joonhyuk Yang (Notre Dame) and Eric Anderson (Northwestern). “Using Grocery Data for Credit Decisions.” Forthcoming in Management Science. 2024: https://doi.org/10.1287/mnsc.2022.02364.


Give credit where credit is due. The Woodlands falls in the "very good" category. Photo courtesy of Local Government Federal Credit Union

Houston suburbs charge ahead with some of the highest credit scores in Texas

fit for fico

Give the residents of The Woodlands some credit. They’re able to brag about achieving some of the highest credit scores in Texas.

A new study from personal finance website WalletHub shows the median credit score of a Woodlands resident is 757. Among the 2,572 U.S. cities covered in the study, The Woodlands nabs a 287th-place tie for cities with the highest median credit score.

FICO, the primary producer of credit scores in the U.S., characterizes 757 as a “very good” credit score. On the FICO scale, credit scores range from 300 to 850. A credit score anywhere from 740 to 799 is above the U.S. average “and demonstrates to lenders that the borrow is very dependable,” according to FICO.

WalletHub based the study on September 2021 data from TransUnion, one of the three major credit-reporting bureaus. In the study, The Villages, a retirement community in Florida, is the only city where the median credit score is above 800 — 806, to be exact.

Two other Houston-area suburbs — Montgomery and Friendswood — ranked among Texas cities for the highest credit scores, coming in with a median credit score of 738 and 732, respectively.

Here are the other cities in the top 15 statewide:

  • Colleyville (Dallas-Fort Worth), 777, 23rd nationally.
  • Flower Mound, 762, tied for 185th place nationally.
  • Coppell (Dallas-Fort Worth), 758, tied for 262nd place nationally.
  • The Woodlands (Houston), 757, tied for 287th nationally.
  • Keller (Dallas-Fort Worth), 756, tied for 300th nationally.
  • Allen (Dallas-Fort Worth), 750, tied for 428th nationally.
  • Georgetown (Austin), 749, tied for 446th nationally.
  • Frisco (Dallas-Fort Worth), 748, tied for 467th nationally.
  • Cedar Park (Austin), 743, tied for 568th nationally.
  • Plano (Dallas-Fort Worth), 740, tied for 629th nationally.
  • Montgomery (Houston), 738, tied for 681st nationally.
  • Friendswood (Houston), 732, tied for 784th nationally.
  • Rockwall (Dallas-Fort Worth), 732, tied for 784th nationally.

Among Texas’ biggest cities, Austin is the only one where the median credit score exceeds 700. In the Capital City, the median score is 713, tied for 1,208th nationally. San Antonio is next in line, at 664 (tied for 2,236th nationally), followed by Houston (662, tied for 2281st nationally), Dallas (661, tied for 2,299th nationally), and Fort Worth (615.5, tied for 2,545th nationally).

Bad news for Sugar Land, which is the only Texas city with a median credit score below 600. According to the study, the median score there is 571, putting it in 2,563rd place nationally. FICO identifies that as a “poor” credit score.

J. Keith Baker, a CPA and certified financial planner who teaches at Dallas College’s North Lake campus in Irving, tells WalletHub that the best way to improve or maintain your credit score is to pay your credit card balances in full every month.

“Some folks will close a credit card account thinking it will help them manage their spending and protect them from identity theft since they are not using an account,” Baker says. “While this may make sense for an individual’s financial situation, do not assume it will automatically improve your credit scores.”

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This article originally ran on CultureMap.

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Pharmaceutical giant looks to bring $5.9 billion facility to Houston

in the works

Pharmaceutical company Eli Lilly and Company is looking to build a $5.9 billion active pharmaceutical ingredient (API) manufacturing facility in Houston, according to a recent filing with the state of Texas.

The proposal states that the project plans to employ 604 full-time direct employees at the site upon ramp-up completion. These would include operations technicians, production specialists, maintenance support, quality control/assurance, engineering, administration, and management. Construction is projected to begin in 2026, with a completion target of 2030 and commercial operations beginning in 2031.

If completed, Lilly would purchase 236 acres at Houston’s Generation Park from McCord Development, the commercial development’s owner. The purchase would include multiple buildings, outdoor facilities, infrastructure buildout, and equipment installation.

This proposed Texas plant would be part of Lilly’s $27 billion effort to expand its U.S. production capacity, which was announced in February and includes construction on four new facilities in America. Lilly has previously referred to the plants as “mega sites.”

"This represents the largest pharmaceutical expansion investment in U.S. history," Lilly CEO David Ricks said during the February news conference.

The company has applied for school tax abatements under the new Texas Jobs, Energy, Technology, and Innovation program, according to reports from the Houston Business Journal. This incentive program allows school districts to limit the taxable value of a property for a portion of school taxes, which could save companies millions of dollars on a large portion of property tax bills. It also gives a 10-year tax cut for new manufacturing and development facilities, as long as there is localized job creation.

Houston airports poised for 1.3 million travelers on Memorial Day weekend

Taking Off

George Bush Intercontinental Airport (IAH) and William P. Hobby Airport (HOU) are estimated to see 1.3 million travelers during the Memorial Day period (May 20 - May 28). Despite large crowds, the airports say they have prepared with multiple new improvements designed to slow traffic and make check-ins easier.

“Air travel drives jobs, business and tourism — and this summer, Houston Airports is powering that growth,” said Jim Szczesniak, director of aviation for Houston Airports.

“From streamlined security to a smarter website to new flights and fresh amenities, we’re delivering improvements that support Mayor Whitmire’s call for a more user-friendly Houston. These upgrades aren’t just about moving people — they’re about moving our economy forward.”

IAH in particular has seen remarkable drops in wait times thanks to the new IAH International Arrivals Curb. Part of the $1.458 billion IAH Terminal Redevelopment Program (ITRP), it reduced airport traffic during the Christmas holidays by a whopping 99 percent, with the average wait time reaching only two minutes. Other improvements include TSA Precheck enrollment pods at both airports and the agility for international travelers to recheck bags without leaving the terminal after they have passed through customs.

The amount of travelers expected for Memorial Day is slightly below 2024 numbers, but Houston Airports expects record-breaking travel over the summer. Current estimates show 19.5 million people moving through both airports through Labor Day, a 250,000 increase over last year. Part of this can be attributed to IAH's increasing status as the gateway to Mexico, Central America, and South America, running nonstop flights to new tourist hot spots like Puerto Escondido.

In additions to streamlining the flight processes, Houston Airports are expanding concession and shop offerings. Hobby recently opened The Rustic, Chick-fil-A, Pei Wei, and Throughgood Bistro. Bush added Hip & Humble, a boutique gift and souvenir seller focused on the items for women travelers and those looking for a little luxury when they return home. And, as always, Houston Airports have some of the finest art in the country. All of it together makes traveling to and from the city much less stressful than the big crowds would portend.

"We’re ready to welcome millions with efficiency and a warm Houston spirit,” said Szczesniak. “This summer, travelers will see and feel the difference we’ve made.”

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This story originally appeared on our sister site, CultureMap.com.

Houston e-commerce unicorn reaches $1.6B valuation with $50M fundraising round

fresh funding

Houston-based Cart.com, a provider of fulfillment and logistics services for B2C and B2B brands, has raised $50 million in venture capital, pushing its valuation to $1.6 billion. Since it was founded in 2020, Cart.com has raised $475 million.

Cart.com earned “unicorn” status in 2023 after securing a $60 million Series C round of funding. In the startup universe, “unicorn” refers to a private company that’s valued at $1 billion or more. Last year, Cart.com nailed down $130 million in debt funding, lifting its valuation to $1.2 billion.

Technically, Cart.com no longer qualifies as a startup. Rather, it’s now in “scaleup” territory. This term refers to a startup that has notched substantial growth and has maintained a stable workforce, among other positive achievements. Notable brands that have graduated from startup to scaleup include Airbnb, Peloton and Uber.

The $50 million round includes money from funds and accounts managed by BlackRock and Neuberger Berman, and new investors such as eGateway Capital, along with several unidentified venture capital firms, investors and family offices.

The company said it will use the fresh capital to fuel its global expansion through investments in infrastructure, technology, and M&A.

“Cart.com is continuing our strong growth trajectory across all operating metrics, and we intend to utilize this additional capital to accelerate the expansion of our platform and bring our customers new capabilities to enable their growth,” Omair Tariq, founder and CEO of Cart.com, said in a news release. Tariq added that his company is “well on our way to building the largest and most comprehensive platform in our space.”

Over the past 12 months, Cart.com completed its acquisition of OceanX, the fulfillment operation of direct marketing company Guthy-Renker, and Amify, an Amazon marketplace optimization and advertising platform. Bill Guthy, founder of Guthy-Renker, now sits on Cart.com’s board of directors