Lenders benefit from reduced risk, significant profit improvement by factoring economic forecasts into FICO Score-based decision strategies

ATLANTA and MINNEAPOLIS—April 13, 2010— Equifax Inc. (NYSE:EFX), and FICO (NYSE:FICO), announced the launch of a new analytic solution to help lenders better anticipate account and portfolio risk in light of shifting economic events.  FICO® Economic Impact Index provides lenders with critical insights for portfolio stress testing, enabling them to adjust their risk management policies and decision strategies.   Developed by FICO and initially available on an exclusive basis from Equifax, FICO Economic Impact Index helps lenders understand how future economic fluctuations can affect BEACON® 09 (FICO® 8) credit scores. Leveraging Equifax’s unique data assets, the solution helps lenders assess the potential impact of various economic scenarios on the repayment risk levels related to FICO 8 scores. 

“Whether the economy is in a downturn or an upswing, FICO Economic Impact Index is equally valuable to lenders as an analytic tool for confidently managing external risk driven by shifting economic conditions,” said Robert Duque-Ribeiro, vice president and general manager of Scores at FICO. “The new Index gives lenders greater control over portfolio performance and profitability and can help them avert bad-debt losses in the millions. It also helps lenders take advantage of opportunities in an improving market or consumer credit segment.”

This patent-pending solution indicates the projected positive/negative level of impact on a specific FICO score range based on selected economic forecasts. With this information, lenders can make informed decisions about modifying score cutoffs for account opening and portfolio management decisions.  Source: Joint Press Release   

BIIA Newsletter May I – 2010 Issue