As the after shocks of the subprime meltdown reverberate across the globe, Fair Isaac, the Minnesota-based analytics and decision management provider, has been taking serious heat for its FICO credit score. The three-digit number, which measures the likelihood that a borrower will repay, is one of many barometers of credit worthiness that U.S. lenders use for businesses such as mortgage lending and credit card products.Michael H. Campbell, chief operating officer at Fair Isaac, says that FICO should not be blamed for the credit crisis. “The subprime issues in the U.S. are not really an issue of credit scoring. Credit scoring is a very straightforward task. It ranks the risk of individual consumers,” he says. “It’s never been intended as the sole measure of whether or not a loan should be granted. It’s only ever been part of the 3Cs.”  The violation of the underwriting process, which is supposed to involve a thorough check of the 3Cs (capacity, character and collateral) was the real problem, says Campbell. “If you look at the FICO score over the last 20 years, we have always consistently and accurately rank ordered the risk,” thus vociferously defending Fair Isaac’s signature product. Nor does Campbell agree that the subprime fallout will stall the company’s booming Asia business, which according to him relies heavily on manual processing (as opposed to automation, which is widely-used in the U.S.) “We haven’t seen anything in this region that approaches the same sort of application of fundamentals. But you still have potential risk if a global recession happens. Part of what banks need to be able to do is to assess the performance of their portfolios in different macroeconomic conditions,” he says.  Source: Excerpt of an article published by the Asian BankerBIIA Newsletter May – 2008 Issue