FICO’s Scoring Shovel Gets Bigger

Bank Technology News | November, 2009

Lenders face all manner of new risk-assessment challenges, and for FICO, that spells opportunity. Its response is FICO Score Trends v2.0, a subscription service for banks, auto finance firms and mortgage lenders that provides a much deeper dive into an institution’s risk exposure.

“This allows lenders to look at how a general population is performing and the relationship between risk and scores,” says Rachel Bell, director of global scoring solutions for FICO.

The service’s features include help in migrating to the new FICO 8 score, which doubles the predictive power of scores and is available from all three credit reporting agencies. Since FICO 8 became available earlier this year, five of the seven largest U.S. banks and four of the five largest credit card issues have begun using it. FICO Score Trends provides information on how scores have changed (from previous version of FICO to FICO 8)—to allow lenders to seamlessly make the transition to FICO 8. “There’s better segmentation,” Bell says. “And the scorecards are the same, so it’s easier to implement.”

Additionally, regional trends have been broken down further by adding state level and metropolican statistical area segmentation, which is narrower than the Federal districts used in earlier versions. Other features allow lenders to review consumer performance by earlier and later stages of risk with the addition of 60-day default and charge off data to the existing 90-day default information. There’s also a new report, the FICO Odds Shift Impact, which captures movement in odds at a given score from a prior time to current.