Endorsed Partner BUILDING GREATER STRENGTH WITH FICO FICO has been what many consider as the number one stand-alone credit decision model since having been first introduced in 1989 by Fair Isaac Corp. Can we build on that foundation to create a more futureforward way of predicting lending outcomes? As the world has evolved, so has the way we analyze data. New and exciting technology allows for innovative algorithms that give us a more defined look at an even greater data set. An all-encompassing view of the bigger borrower story can bring today’s lenders to a new point of realization – that these new methods of analyzing credit, combined with the FICO mainstay, may lead to even better outcomes. Many facets make up an individual’s credit story beyond payment history and amounts owed. There is data that, once analyzed, can give critical insights to borrower characteristics unable to be categorized by a single number. That is because people are more dynamic than their credit scores. Think of a traditional consumer credit scoring model as a printed picture. It is a one-dimensional take on a person’s whole life in credit. In that static picture, there are balances on debt obligations, utilization of revolving types of credit, like credit cards, delinquency, statuses, etc. As you know, it comes from the three major credit bureaus (EFX, TU, EXP) and represents a vast cross-section of loans originated by banks, credit unions, finance companies, and other lenders across the credit industry. This information adds up to that single definitive score. In contrast, non-traditional models that build on the foundation of FICO incorporate additional predictive information. Essentially, it is the motion picture version that enables a more dynamic view of consumer creditworthiness. This model gives lenders an ability to assess point-in-time information and the momentum of trended credit data factors, which may help predict the future credit conditions for a potential borrower and allow a lender to make more informed decisions. They see a greater depth – balances increasing or decreasing, utilization BY TOM BADOLATO SVP, INSTITUTIONAL RELATIONSHIPS cbak.com 10 In Touch
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