Microbilt has been around a while, providing credit servicing solutions to small and medium businesses.  Guitar stores, furniture centers, auto dealers – that kind of thing.  They started is the DOS terminal days and have grown to become a risk management clearinghouse targeting the un- and underbanked, through a number of interesting partnerships in the past several years.

First, PRBC.  The aspirational alternative credit bureau (in which I led a small investment at CFSI, for disclosure), better known for its pro-consumer advocacy than its ability to scale, was nabbed by Microbilt, and PRBC remains the brand for the alternative database.

Then the FICO Expansion Score.  Credit score pioneer and leader, FairIsaac developed a version of its score based on data not available in the Big Three credit bureaus, the Expansion Score.  Despite best efforts (and no doubt partially thanks to this Great Recession), FICO couldn’t make the Expansion Score a big business.  Recently, Microbilt negotiated an exclusive marketing arrangement with FICO and now offers a FICO-branded score as its own.

Today, Microbilt announced a merger with CL Verify, one of the top payday lending fraud bureaus.  I would guess both are medium businesses themselves, probably doing about $10-20 million in revenues and hovering around profitability.  Unlike the previous transactions, I think this merger represents more than mostly a brand name.  CL Verify has a lot of data in a thriving payday industry.

In the current credit crisis, the profile of payday borrowers is moving up the ladder – as the profile of “prime” borrowers is moving down.  It seems pretty clear that the new Microbilt’s (as the joint venture will be called) data assets will not just be unique, but uniquely relevant to an emerging “credit troubled” class.

I think Microbilt is becoming a juggernaut in the underbanked space, one that if they play their cards right, should be of interest to the Big Three and the institutions that frequent them.  Their new CEO could be just the ticket: Are you the guy, Wink Price?