FICO Pilots New Credit Scoring Method.
Byline: David Morrison
A pilot program offered by FICO, LexisNexis and Equifax could eventually lead to creditworthy consumers with thin credit files using alternative data to obtain credit, the companies said.
The alternative data could be derived from places such as property records, and telecommunications and utility firms. The companies said the new method could enable up to 15 million consumers who otherwise do not have credit data to obtain credit.
Twelve of the largest card issuers are currently taking part in the program, which enables them to receive an additional FICO score that they can use to extend credit to millions more people, the companies added.
"Working with Equifax and LexisNexis, we set out to help unbanked, under-banked and disadvantaged people gain equal access to the standard credit products enjoyed by millions of Americans," Jim Wehmann, FICO's executive vice president for Scores, said. "We're excited by our pilot program's strong results thus far. FICO's focus is on expanding access to credit; not simply scoring more people. Our approach also addresses a paradox for people seeking their first traditional credit product - you often need a credit history before you can get traditional credit."
"Card issuers are seeking opportunities to safely expand access to credit based on new data sources that are reliable, compliant and predictive, and we have received an incredible response to this pilot program," Rick Trainor, CEO of LexisNexis Risk Solutions, Business Services, said. "LexisNexis data, which the financial services industry has trusted for more than 40 years, provides additional insights about creditworthiness that can help bring millions of consumers into the financial mainstream."
"The best-in-class telecommunications and utility data available only from Equifax shows that unbanked consumers who, for example, make regular, on-time payments to wireless carriers, may be creditworthy and reliable customers," Joy Wilder Lybeer, Senior Vice President of Enterprise Alliances, Equifax, said. "We want to help card issuers identify as many additional creditworthy people as possible, so as to work toward a more financially inclusive and responsible borrowing environment."