FICO® Economic Impact Service

Key Benefits

• Limit losses
  With the FICO Economic Impact Service, you can not only assess risk based on past performance, but also adjust for current and future conditions, allowing you to tighten credit policies sooner and for the right populations during an economic downturn.
• Grow your portfolio responsibility
  By predicting the future risk levels based on anticipated economic conditions, you’ll understand when you should proactively loosen credit policies as markets recover.
• Better prepare for the future
  This patent-pending methodology models the historical relationship between a score and systematic changes in consumer behavior in reaction to the economy. This technology allows you to simulate the impact of future macro-economic conditions on your scores to better adjust long-term strategies based on risk preferences.
• Meet regulatory compliance
  With the Economic Impact Service, you can conduct “what if” analysis to understand how the odds-to-score relationship can change under a range of economic conditions, allowing you to create more accurate, empirically derived capital requirements and address Basel II compliance.

Feature Highlights

• Projects the future odds-to-score relationship
  With FICO’s current offering of the Economic Impact Service, we work with you to apply the methodology to a chosen portfolio and score. We build and deliver econometric models custom tailored to capture the relationship between market factors and the selected score’s odds-to-score relationship.
• Enhances multiple score types
  This methodology can be applied to a variety of scores, such as origination scores, behavior scores, broad-based bureau scores like the industry-standard FICO® Score, and Basel II risk metrics.
• Quickly integrates into existing systems
  Economic Impact Service builds on your current risk management tools, enhancing your decisioning processes by filling a key knowledge gap in developing more profitable, proactive strategies.

Implementation
Two outcomes are provided to assist you in implementing the results of the Economic Impact Service into your operations, giving you the choice for how best to incorporate the analytics :

• Expected alignment parameters
  Expected alignment parameters give you the means to align your current scores to forecasted odds. These parameters can be implemented into your originations or account management system, such as FICO® TRIAD® Customer Manager.
• Expected odds chart
  The second type of output is an expected odds chart that you can use to adjust strategy cut-offs and calculate loss/capital requirements.