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The Atlantic Monthly recently published an essay covering the history of credit bureaus. I thought of the number of times people have challenged our discussion of bureaus and small business credit. “But everyone knows they are about consumer credit (emphasis theirs)!”

As this piece makes clear, the mercantile agency that would become Dun & Bradstreet was the granddaddy of all credit bureaus.

Follow the link above or here to read Sarah Jeong’s excellent coverage but here are some excerpts:

“They were enormously tech-savvy, and invasive in their methods–and they enlisted Abraham Lincoln into their ranks.”

“The present day reality might be a grotesque ziggurat of data sitting in the middle of Utah, but its spiritual ancestor is the 19th-century credit bureau.”

Or consider this, remembering that we are talking about the creditworthiness of a business:

“They sought information (often unreliably subjective) about a person’s credit-worthiness, judged not just in terms of his financial circumstances, but his personal character–Was he married? Did he have children? Who were his parents? What church did he attend?”

“‘The whole proceeding bears upon its face the most diabolical jesuitism that has ever cursed the world.’ wrote one merchant.”

The article notes that regulations have been enacted to provide a measure of transparency and accountability in consumer credit (but not when the business owner’s consumer credit information is used for a business loan).

Still, it concludes:

“Whether it’s a 19th century credit bureau or a 21st century rent-to-own laptop store, in this country, the cutting edge of surveillance can be found wherever the debtors are.”

Follow the money so to speak.

–LaVonne for Lumenous

It was cold and windy when I boarded Metro-North at Fordham Saturday morning. My destination was a conference at Yale’s law school: “Unlocking the Black Box: The Promise and Limits of Algorithmic Accountability in the Professions.”

Anything about black box systems grabs my attention. This particular conference was organized by Frank Pasquale, a law professor who has researched the subject deeply. His book on it came out last year. This event caught my eye because a session was devoted to finance including a presentation on recent innovations in credit scoring.

It was an impressive report, jointly presented by the co-authors, a lawyer (Mikelia Hurley) and a data scientist (Julius Adebayo). But, like so much research and advocacy, the focus was consumer credit. I’m not faulting this at all. It’s an enormous topic and affects, well, everyone. As the authors noted, current regulations exist to protect consumers but have not kept up with technical capacity to capture much broader data about consumers than any drafter of such regulations could have imagined.

I was delighted that the team went beyond analyzing the problem to craft proposed legislation to fill the gaps. We chatted afterward. I brought up and they were aware of the fact that consumer credit information about business owners, historical as well as the more recent novel uses of consumer social behavior, is used to evaluate small business credit. Because the decisions fall outside consumer credit, the regs technically do not apply.

They had considered broadening their proposal to encompass this use of data but ultimately decided against it.

I understand that decision. I would have done the same thing. More important to get something on the books than muddy it by introducing a whole new basis for governing the use of big data. Plus, I much prefer to see innovations launch that solve a real problem rather than default to adding laws to make it happen. Even though I’m a former lawyer!

Still . . . .

I’m rethinking my position on this. Maybe a more full-court press is needed on behalf of small business owners everywhere. Especially in this campaign season where I just don’t see any meaningful coverage of plans to invest more in small business growth.

Until then I see small business credit as being the ultimate double-whammy. You get judged for how you leveraged consumer credit to make up gaps in your ability to finance your small business and when you do get capital and credit, its a messy and disjointed effort in which you respond to multiple requests for information that are more or less the same but always just a tad different for each.

We do work hard for our money!

–LaVonne for Lumenous




This morning I met with a group of women interested in financial technology innovation. I gave them an overview of Lumenous and its significance to small businesses trying to access capital and credit.

The questions were many, thoughtful and challenging. I especially enjoyed the technology questions. I love to talk about how we thought through managing small business data submitted by each business.

In my effort to avoid jargon I missed clarifying a key point. It has to do with a question I was asked about how data comes into our system. I did point out that we don’t claim any proprietary interest in that part of the system and are using other innovator’s tools. But it is very important that a new open standard has emerged called the Open Authorization Protocol.

Many versions have been released over the years since 1.0 in 2006. OAuth 2.0 is a relatively recent phenomenon. People who deal with APIs all the time sort of yawn over it. We think it’s a turning point for the credit industry.

What it means in practical terms is that, for example, I can use any accounting software online (or backed up online) and then decide I want key financial information in that software to stream to another service or platform. For Lumenous, it means an easy way for a business owner to log into Lumenous, create a profile name and then authorize balance sheet and income statement data, as far back as I’ve used that software, to display in my business credit profile.

What the Lumenous system does to visualize that data almost instantly and make it possible to selectively share is complicated but the open protocol that many great software engineers voluntarily created means we all can create our own credit profiles using existing data from private, public and premium sources.

It means we no longer need to depend on credit bureaus to go out and collect data they then sell to our creditors.

We can easily build our own profiles and share them directly with our creditors. For a small business, that is revolutionary. In effect they get the same disclosures regulations ensure for consumer credit, but without having to wait for Congress to act.

We look forward to seeing how this new way to tap into data transforms other industries. Send us a message or comment here if you know of other examples.

–The Founder


A Canadian colleague just sent me an email pointing out that the US views Santa Claus as an indebted independent toy distributor with a FICO score while Canada just issued him a passport. We Americans just love to score people it seems.

You can follow the links above or here and here to see for yourself. Santa’s Credit Report is supposed to be entertainment but it does underscore the plight of small business owners in our credit system.

Here are some excerpts from the maker and seller of the FICO score as a nudge to encourage viewers to check out their scores:

Santa’s “credit mix:” Refinanced mortgage in 2009. On one hand he has paid down half of it. On the other he has a home equity line of credit that he used to expand the toy factory in 2013. He also financed part of the purchase of a new hybrid sleigh (cute but how exactly does that work? lunar panels + reindeer?).

Santa’s credit history goes back to include the “eons” during which he has been making toys. Alas his payment history shows he was over 30 days late on a credit card payment during the recession. Also he has a credit card with a $50,000 limit that he maxes out during the holidays to help with toy production.

In other words, not all that different than just about every American small business owner I know!

The Founder

I was going to give the big data credit profiling posts a rest. I was sure more interesting news would justify a post of a different sort.

Then along came the news that China has developed a new score that rates creditworthiness and, ummm, good citizenship. This first piece delves into the concept itself. Here is a relevant excerpt:

In addition to measuring your ability to pay, as in the United States, the scores serve as a measure of political compliance. Among the things that will hurt a citizen’s score are posting political opinions without prior permission, or posting information that the regime does not like, such as about the Tiananmen Square massacre that the government carried out to hold on to power, or the Shanghai stock market collapse.

Then take a look at another writer’s take on how gamification plays into such scoring. For example:

[A] committed government program could apply deep social pressure towards conformity while giving the
appearance of lightening up on oppression and encouraging transparency.

I actually think this news is a good and timely thing. It’s distant enough from the western world and a bit more extreme than the American trends that are of concern. But sometimes looking outside our own borders to critique such actions forces us to look at ourselves differently.

It really is time to re-imagine the credit score model. The beauty of modern data science is it lends itself to more than the (initially) favored approach of black box profiling. We can do it!



I really hate the glib way media, pundits, and, well, investors, rush to embrace a hip term. Ultimately, depriving it of any real meaning. I love to hate unicorns, for example. Now even investors are acknowledging that the term unicorn as applied to $1B+ companies has become symbolic of a rather skewed way of going about changing the world. Wow, did they really not see that coming?

Of late the hype has turned to the gig economy. Here’s a recent Bloomberg piece on the subject. The idea is that hip new web apps like Uber and Upwork (probably DogVacay too) are creating a new way to think about work. The ability to spread your time across multiple gigs, none of which provides job stability much less decent benefits, but it’s all riding on way cool technology (yep, Silicon Valley loves them) and therefore is way cool.

I launched Lumenous to go after the problem of many, many small businesses and their owners falling in the cracks in our credit system. I have watched with concern as a new wave of venture financing has gone to startups that swear what these business owners want most is a quickie loan from a soulless distributor of algorithm-supported cash. What big data credit and big data underwriting have in common is data you can’t see or control and the impersonal machines behind it all.

I do believe the gig economy is a real phenomenon. I see all indicators being that the big corporate model is going to erode. Evidence is already there in the form of hoarding cash instead of hiring more people. What that tells me is if we don’t change our major systems, like the credit system, we will all head toward a new form of feudalism. it will make the angst of the 99% of today seem quaint.

History gives us some interesting insights how to head off the pain. it involves empowering people in a new way. That’s where I think the modern coming of guilds comes into play.

Our pilot users suggested some ways this could emerge. One, a sole proprietor of a IT hosting service for small businesses in his community, wants to create a credit circle. Others suggested business-to-business groups who would develop their own peer-based lending model. That would be in contrast to how peer-to-peer lending has evolved as you can see in this recent coverage.

I would love to hear more suggestions about how to drive and sustain a guild economy. I don’t think we need to wait for gigs to be the dominant way of making money. As I heard in our pilots, business owners already see the potential. Let me know what you think!



Just saw this headline at CNN Money

“U.S. sees big spike in black and Hispanic women entrepreneurs”

The data comes from census studies dating back to 2012 but are just showing up in the press now. Lots of interesting bits in a not very long piece. Alas minority women still make a lot less than white women but the underlying take-away is that even with few shots at securing financing from investors, women are starting and operating small businesses profitably. That means they are coming up with good ideas or addressing market needs and customers are paying them for it.

Check it out. Nice little graphic lays out where all the growth has come since 2007.