Episode summary
Fintech Takes x Nova Credit Presents Cash Flow Conversations Ep 7: A Traveling Credit Score
Fintech Takes
· · 1 hr 1 min · Hosts: Alex Johnson · Guests: Juan Hernandez
Summary
Block’s Cash App score is a proprietary underwriting model built on first-party Cash App data rather than bureau files, and Juan Hernandez argues it captures consumer creditworthiness more directly than traditional scores. He says Block first used bureau data alongside its own data, but later found that a version of the model using only first-party data performed the same in statistical validation and, in an A/B test, produced higher approvals, higher conversion, and lower losses.
Hernandez argues that the credit system has become increasingly detached from the behavior it is supposed to measure. He says bureaus, inquiries, and many credit-building conventions reflect historical quirks and proxy signals that can lag real cash-flow stress, while fintech products like BNPL do not fit cleanly into old reporting frameworks. In his view, the result is a system that is too slow, too opaque, and too easy to game.
Block’s answer is to make the score visible inside Cash App and eventually usable outside Block’s ecosystem. Hernandez says customers can see milestones tied to products like Borrow and Afterpay, while lenders could use the score through a Nova Credit distribution partnership or potentially through a Block-owned CRA. He presents the broader goal as a more transparent, customer-controlled system that shows people how their financial behavior affects access to credit.
Key takeaways
- Juan Hernandez says Block’s internal testing found a first-party-only model matched bureau-enhanced validation and improved approvals, conversion, and losses in an A/B test.
- Hernandez argues the traditional credit score has become a lagging, partly performative proxy that can miss real-time cash-flow deterioration.
- He says BNPL and other modern products expose how hard it is to force new consumer behavior into Metro 2 and older bureau frameworks.
- Block is showing the Cash App score to customers inside the app, and Hernandez says engagement has been strong, with 55% of viewers returning within 30 days and about 70% for those who took an action.
- Hernandez says Block is evaluating becoming a CRA itself while also launching distribution through Nova Credit and direct lender partnerships.
Notable quotes
“we built a version of the model that didn't use credit report data at all. Performed exactly the same on like statistical validation methods”
“What is unusual is making that score legible to end customers. No other lender, as far as I can tell, has ever done that in the US”
“And what we found was like an impossible, you know, trifecta of things. It was like higher approval rate, higher conversion rate from customers, and then lower loss rates”
“the model itself has become like I want to call it performative for lack of a better word where like instead of describing the world, it is the rulebook that people follow”
“the Cash App score is a predictive model. It's an ML model that, you know, predicts like default risk”
How the episode opens
This episode is brought to you by Nova Credit. Whether you're expanding credit access for newcomers or deepening risk visibility across gaps and beyond, Nova Credit lets you unlock credit bureau, cash flow, and alternative data through a single FCRA compliant platform built for today's credit decisioning. Learn more at novacredit.com.
Hello, and thanks for joining us for another episode of our ongoing quarterly series, Cash Flow Conversations, sponsored by our friends at Nova Credit. Today's conversation is one that I've been waiting to have for a long time. Last year, Block announced that it would be giving select users visibility into their real-time financial health scores.
That score, the Cash App score, which Block designed for its own internal underwriting and risk management purposes, is not by itself that unusual. Uh pretty much all large lenders build their own custom risk underwriting models rather than relying on an off-the-shelf general-purpose model like FICO. What is unusual is making that score legible to end customers.
No other lender, as far as I can tell, has ever done that in the US. And certainly, no other lender has gone a step further and made its own proprietary score available to other lenders to use in evaluating their own customers for credit. But that's exactly what Block is now doing.
It's making the Cash App score, a risk underwriting tool built on Block's internal data, not traditional credit bureau data, available to other lenders that are evaluating Block customers for credit. Fascinating. In today's episode, I was delighted to be joined by Juan Hernandez, head of credit and underwriting at Block.
Juan and I talked through the current and increasingly fractured state of credit data and scores, how the Cash App score was built and how it works, why Block is making it visible to customers and available to other lenders and in a fintech takes exclusive we talked a little bit about its new distribution partnership with Nova Credit.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- cash flow data
- credit scoring
- alternative data and underwriting
- adverse action notices
- lending model validation
Companies and tickers mentioned
- FICO
- Block
- FICO
- Nova Credit
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Fintech Takes, this episode and its artwork belong to Alex Johnson. Octagon is not affiliated with the show; this page is an independent summary.
