Block's Modern Approach to Credit: Expanding Access While Managing Risk

The traditional credit system isn’t built for today's economy. It relies on outdated data, excludes millions of creditworthy people, and often penalizes those trying to build financial health. At Block, we're taking a different approach — one that uses near real-time data and innovative technology to expand access to credit responsibly.

Nearly 50 million Americans have insufficient credit history in the eyes of credit bureaus.¹ Another 47 million are considered "subprime," often due to circumstances outside their control.² This isn't just about numbers — it's about people being denied opportunities because the system wasn't designed to see their true financial health.

Traditional credit scores look backward, not forward. They rely on monthly updates that can miss important changes in someone's financial life. They reward behaviors more common among affluent groups while overlooking reliable indicators of financial responsibility, like consistent bill payments or steady income from gig work. The impact is real: A small business owner with strong sales but no credit history struggles to get a loan; a young professional who avoids credit cards is invisible to the system, despite managing money responsibly; a worker with steady income can't access emergency funds because of years-old credit issues.

Block is demonstrating what it looks like to empower customers regardless of their traditional credit scores. Through Square Loans, Cash App Borrow, and Afterpay, we're using near real-time data to evaluate creditworthiness more accurately and fairly than traditional credit scores, which rely on limited, outdated, and often inaccurate data. Instead, we look at near real-time financial behavior: regular paycheck deposits, consistent bill payments, cash flow patterns, spending habits, and business performance (for Square Loans). This approach works. Our data shows that many customers considered "high risk" by traditional standards are actually very reliable borrowers when evaluated on their overall financial health. For example:

• 70% of Cash App Borrow actives have credit scores below 580, yet the product maintains repayment rates above 97%³
• At a fixed loss threshold, Square’s underwriting model has approved 88% of applicants, compared to 54% with the bureau score⁴
• In a recent analysis, Block found that relying on data from a major credit bureau alone for Afterpay underwriting approvals would have excluded approximately 13% more customers to maintain the same level of risk⁵

By combining near real-time data, innovative technology, and customer-first design, we're creating credit products that work for more people. Our results show what's possible: higher approval rates, strong repayment performance, and better outcomes for customers.

Unlike the black box of credit scores, our system creates clear connections between financial habits and credit access. When someone shows positive financial patterns — like steady income or consistent repayment — they can see their credit access grow responsibly. This transparency helps build trust and encourages healthy financial behavior.

This isn't just theory — it's working at scale. In fact, through products across Block’s businesses, we’ve extended more than $100 billion in credit globally across our products while keeping loss rates low.⁶ Specifically:

• Square Loans has provided over $22 billion in small business financing, empowering businesses to grow through hiring new staff, buying inventory, and opening new locations, among other choices⁷
• Cash App Borrow has helped more than 9 million actives access nearly $15 billion in short-term credit⁸
• Afterpay serves over 20 million active consumers worldwide, with Gen Z and millennials comprising a majority of the customer base⁹

More importantly, we're proving that expanding access doesn't mean increasing risk. Our loss rates are consistently low, and we’ve shown we can approve more customers than traditional credit bureaus at these rates. This shows that when you evaluate credit asks from people based on their real financial lives — not just their credit scores — you can responsibly serve millions who were previously excluded.

The future of credit shouldn't depend on feeding more data into an outdated system. It requires building a better one — one that reflects how people actually earn, spend, and manage money today.

This is just the beginning. We are open to working with policymakers, regulators, and credit bureaus to improve how financial health is measured and reported, whether that means improving existing systems or building alternatives. That being said, we want to avoid paths that would reinforce the same systemic limitations that created exclusion in the first place. We think that frameworks need to:

• Accurately reflect overall financial health in near real-time
• Deliver clear and measurable benefits to consumers
• Prioritize customer data control, transparency, and accuracy

Overall, we're committed to expanding access while maintaining the highest standards of responsible lending. Because when credit works better, it creates more opportunities for everyone. We remain committed to the work ahead.