FICO will use LexisNexis and Equifax alternative data to create scores for potentially 15 million unbanked and under-banked consumers
SAN JOSE, Calif. — April 2, 2015 — FICO (NYSE:FICO), LexisNexis® Risk Solutions, and Equifax (NYSE: EFX) today described details of a pilot program currently underway. The pilot program allows 12 of the largest credit card issuers in the U.S. to use alternative data to identify creditworthy individuals who would otherwise be unlikely to obtain traditional credit.
Based on extensive research, FICO’s data scientists found that alternative data such as property records, telecommunications and utility information can reliably be used to score 15 million consumers who do not have enough credit data to generate FICO scores. By using alternative data from LexisNexis and Equifax, FICO will give card issuers a FICO® Score that complies with relevant regulations that they can use to extend credit responsibly to millions of additional people.
"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," said Jim Wehmann, FICO’s executive vice president for Scores. "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."
The data used in FICO’s pilot program includes telecommunications and utility bills from Equifax as well as property and public records from LexisNexis. This new FICO Score is engineered to work alongside existing FICO® Scores. Card issuers will be able to use the alternative score without having to "rip and replace" existing systems, significantly lowering the cost and accelerating time to market.
"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," said Rick Trainor, CEO, LexisNexis Risk Solutions, Business Services. "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," said Joy Wilder Lybeer, Senior Vice President of Enterprise Alliances, Equifax. "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."
FICO is planning to complete the pilot program in the coming months, and expects to make the score based on alternative credit data available to more lenders later this year. Card issuers who are interested in learning more about FICO’s work with alternative data may contact FICO at FICOScoreInfo@FICO.com.
FICO (NYSE: FICO) is a leading analytics software company, helping businesses in 90+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company’s groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption. These include the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health.
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Equifax is a global leader in consumer, commercial and workforce information solutions that provides businesses of all sizes and consumers with insight and information they can trust. Equifax organizes and assimilates data on more than 600 million consumers and 81 million businesses worldwide. The company’s significant investments in differentiated data, its expertise in advanced analytics to explore and develop new multi-source data solutions, and its leading-edge proprietary technology enables it to create and deliver unparalleled customized insights that enrich both the performance of businesses and the lives of consumers.
Headquartered in Atlanta, Equifax operates or has investments in 19 countries and is a member of Standard & Poor's (S&P) 500® Index. Its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. In 2014, Equifax was nominated as a Bloomberg BusinessWeek Top 50 company; its CIO was listed as one of the top 100 by CIO magazine; and the company was named to the Fintech 100 list, was recognized as a top 20 company to work for by the Atlanta Journal-Constitution, and was named a 2014 InformationWeek Elite 100 Winner. For more information, please visit www.equifax.com.
About LexisNexis Risk Solutions
LexisNexis Risk Solutions is a leader in providing essential information that helps customers across industries and government predict, assess and manage risk. Combining cutting-edge technology, unique data and advanced analytics, LexisNexis Risk Solutions provides products and services that address evolving client needs in the risk sector while upholding the highest standards of security and privacy. LexisNexis Risk Solutions is part of RELX Group plc, a world-leading provider of information solutions for professional customers across industries.
LexisNexis is a registered trademark of Reed Elsevier Properties, Inc., used under license. Other products or services are the trademarks or registered trademarks of their respective owners.