Across the emerging world, innovative financial institutions are realizing the potential of alternative data to transform lending. Data from online social networks, mobile phone records, and psychometrics are helping to illuminate the potential of borrowers where traditional credit information is scarce, enabling new lending and greater control over risk. But as these alternative sources of data find traction, it is important to recognize that not all data sources are created equal. Rather, they possess important strengths and weaknesses with major implications for financial institutions and the clients they serve.