CCR World Magazine

MINNEAPOLIS — FICO, the leading provider of analytics and decision management technology, today announced that its FICO® 8 Score, used for consumer credit risk assessment, has been adopted by more than 2,500 banks and financial institutions. This widespread market adoption occurs as lenders continue to benefit from the enhanced predictive analytics of the new score.

Recent validations quantify the returns lenders can expect from integrating the FICO® 8 Score into loan originations and customer management decisions.  In a newly published validation by a major U.S. bankcard issuer, the FICO 8 Bankcard Score resulted in a gain of up to $5.5 million on 2 million newly booked credit card accounts.  This is an area of keen focus, as the ability to more accurately identify each consumer’s risk will help bankcard issuers grow their card portfolios responsibly.
 
In another top bankcard issuer’s study, using the FICO® 8 Score for account management across the issuer’s entire card portfolio would produce an estimated $12 million in net new profit.  The new score will assist the lender in segmenting their customer base for cross-sell promotions and credit line increases.
 
FICO’s own studies show that the FICO® 8 Score improves credit risk prediction by up to 15% over earlier FICO Score models, helping lenders make better decisions across the credit lifecycle while reducing default rates on consumer loans. The strongest improvements in risk prediction are achieved in key segments such as consumers who are opening new accounts and those who have a blemished credit history. In addition, this newest generation of FICO credit risk scores includes refinements to help lenders better evaluate consumers who are comparatively new to credit.
 
“We’ve observed a continuous growth in FICO® 8 usage since the new score became available at all three national credit agencies in July 2009,” said Robert Duque-Ribeiro, vice president and general manager of Scores for FICO. “As the pool of prime candidates decreases, lenders need more precise segmentation in order to control losses and maximise profitability from their card and loan portfolios. In a tough lending environment, FICO 8 is a critical tool for lenders to improve risk evaluation and loss avoidance.”
 
“With the auto industry showing signs of recovery, we felt it important to have the most precise risk evaluation tools available in the market today to assess new loan originations,” said Mike Andra, director of Pricing and Credit Risk Analytics for Santander Consumer USA Inc. “By leveraging the most predictive FICO® Score tailored to auto finance, Santander Consumer USA is positioned to responsibly grow our Auto portfolio.”
 
Since its introduction 20 years ago, the FICO® Score has become the standard measure of US consumer credit risk, across the retail banking, mortgage, credit card, auto lending and retail industries. Today FICO Scores are in use at more than 90 of the 100 largest U.S. financial service institutions. To meet global demand, the FICO Score is also available to lenders in 20 countries on five continents.

(Source - FICO Press Release)