Russia's war against Ukraine has sparked the greatest European refugee crisis since World War II, forcing more than 6 million Ukrainian people to leave their homes,
This is because FICO — the San Jose, California, analytics company that produces the ubiquitous FICO credit score — has partnered with Ukraine's largest credit reporting agency and a Polish credit bureau to provide credit scores for displaced Ukrainians in Poland.
"It's a big effort," said Julie May, vice president and general manager of B2B scores at FICO. "In order to do something like this, you have to have access to data. In this scenario, we had several partners that did a significant amount of work to make this happen."
First, the three entities — FICO, Poland's Biuro Informacji Kredytowej (BIK) and the Ukrainian Bureau of Credit Histories (UBCH) — had to build a secure, virtual cross-border data corridor to carry Ukrainian refugees' credit history data from Ukraine to Poland. That allows the Polish credit bureau to access the data and share it with lenders. Then FICO devised a way to analyze the Ukrainian credit history data and calculate a three-digit FICO score that the Polish credit bureau can share with its bank clients.
FICO expects Polish banks to start using the new scores in early 2024.
"We look at it as primarily a humanitarian effort for us to be able to extend financial inclusion to this population," May said.
Such efforts are badly needed, industry observers say.
Newcomers to the U.S. tend to have a hard time getting credit cards because they lack credit history here. Amex has deployed technology from a fintech, Nova Credit, that could change this.
"This is a great response and addition to humanitarian aid," said Craig Focardi, a senior analyst at Celent who is not involved in the project. "Over time, it becomes a substitute for humanitarian aid. Almost always the majority of immigrants, whether voluntary or on a forced refugee basis, want to work. They don't want humanitarian aid unless they really need it."
This partnership enables Ukrainian refugees to not only get a job and develop a work history, but then to borrow so that they can establish themselves and build a credit history over time and build a new life over time — if staying in Poland becomes their only option.
"We're excited to see some of the industry's large players invest in supporting refugees and migrants," said Misha Esipov, founder and CEO of Nova Credit, which is not involved in the FICO-led project.
Nova Credit, a New York-based fintech, pioneered the concept of sharing credit data across borders. Its credit passport technology does some translation work to make that data intelligible to the receiving lenders.
"Europe is certainly the largest recipient of Ukrainian refugees, Poland being the largest of Europe, so it's exciting to see this partnership come to life," Esipov said of the FICO news.
Both efforts are needed to fill a gap that governments and credit bureaus have been unable or unwilling to work together on to meet.
"The irony of this situation is that a government initiative and a crisis can get countries to all of a sudden cooperate very quickly for something which is very, very helpful to consumers and industry in non-crisis situations, as well," Focardi said.
