Credit Without a File II: Guardrails, Risks, Alternative Credit

In the first part of this series, we explored how alternative underwriting is reshaping access to credit in Mexico by recognizing financial behavior that exists beyond traditional bureaus and formal employment. The promise is clear: millions of people and small businesses long excluded from the system can finally be evaluated on how they actually live and transact. But once the door to credit is opened, a harder question follows: how to ensure it stays open without causing harm.

Mexico’s challenge is no longer whether alternative credit models can work, but whether they can scale responsibly. As digital lenders move from experimentation to mass adoption, the risks become more systemic, less visible, and more consequential. Inclusion at scale requires more than technology; it demands governance, discipline, and a shared understanding of what “good credit” should look like in a digitally mediated economy.

One of the central tensions lies in regulation. Mexico’s Fintech Law, enacted in 2018, laid important groundwork for digital finance, but it was not designed for a world in which credit decisions are increasingly driven by machine learning models trained on unconventional data. The law established principles around authorization, transparency, and consumer protection, yet it left unanswered questions that are now impossible to ignore. How should regulators assess the fairness of an algorithm? What level of explainability should be required when a credit decision is automated? And who bears responsibility when a model systematically excludes or misprices certain groups?

These questions are not theoretical. As alternative underwriting expands, so does the risk of embedding bias into financial infrastructure. Data does not exist in a vacuum; it reflects social and economic inequalities. Variables such as location, device type, or consumption patterns can easily become proxies for income, education, or social class. Without safeguards, models designed to include can end up reinforcing exclusion in subtler, harder-to-detect ways. The danger is not malicious intent, but opacity. When neither borrowers nor regulators can understand how decisions are made, accountability erodes.

Another fault line emerges around data consent and privacy. In Mexico, as in much of Latin America, digital adoption has outpaced digital literacy. Many users agree to share personal data simply to access a service, without fully grasping the scope or implications of that consent. Alternative credit models often rely on continuous data access, not a one-time snapshot. This raises uncomfortable questions: Is consent still valid when the user cannot reasonably anticipate future uses of their data? And how should lenders balance innovation with the right to informational self-determination?

Beyond regulation and ethics, there is a more practical concern: sustainability. Extending credit to populations with irregular income requires a different approach to risk management. Traditional lenders rely on long credit histories and stable employment to predict repayment. Alternative models must infer stability from patterns that can shift quickly in response to economic shocks. Inflation, job volatility, or regional disruptions can all distort the signals these models depend on. When growth is rapid, the temptation is to optimize for approval rates rather than long-term outcomes. History shows that this trade-off rarely ends well.

This is where the distinction between access and financial health becomes critical. Inclusion should not be measured solely by the number of new borrowers brought into the system, but by their trajectory over time. Does access to credit improve resilience, smooth income volatility, and enable productive investment? Or does it trap users in cycles of short-term borrowing that erode trust and stability? Without longitudinal metrics, it is easy to confuse expansion with progress.

Mexico also faces an institutional coordination problem. Alternative credit sits at the intersection of financial regulation, data protection, competition policy, and consumer rights. Yet these domains are often governed by separate authorities with limited overlap. A fragmented oversight structure makes it harder to detect systemic risks early or to establish consistent standards across the market. Regulatory sandboxes can help, but only if they are paired with clear expectations around transparency, auditability, and exit criteria. Experimentation without accountability simply postpones the reckoning.

Open finance adds another layer to this evolving landscape. While the sharing of financial data through standardized APIs can improve competition and consumer choice, it does not automatically solve the inclusion problem. Many of the people most in need of credit still lack formal financial footprints to share. Alternative underwriting fills this gap by interpreting economic life outside traditional institutions. The real opportunity lies in combining both approaches: using open finance to enrich existing data while allowing alternative models to surface new signals responsibly. Alignment between these frameworks could redefine how creditworthiness is understood in Mexico.

Looking ahead, the future of alternative credit will depend on trust—trust from users, regulators, and capital providers. Trust is built through transparency, consistency, and the willingness to slow down when systems show signs of stress. This may require difficult choices: rejecting growth that cannot be explained, declining data sources that introduce bias, or investing in governance that does not immediately improve margins. But these choices are what distinguish durable financial infrastructure from short-lived innovation cycles.

Credit, after all, is not just a financial product. It is a relationship that shapes how individuals interact with the economy and how the economy treats them in return. As Mexico continues to experiment with new ways of evaluating risk, it must decide what kind of system it wants to build. One that simply expands access, or one that fosters genuine financial mobility.

Alternative underwriting has already proven its ability to see what the traditional system ignored. The next phase will test whether it can also exercise restraint, accountability, and care. Inclusion without guardrails is not progress, it is merely a different form of vulnerability. The real measure of success will be whether Mexico can turn credit without a file into credit with a future.