We recently shared that the national average FICO^® Score increased to 716 (as of April 2021). Our blog post on the subject highlighted that consumers in the lower score ranges were the biggest driver of the upward trend from 708 in the prior year. For example, for those consumers who had a FICO^® Score value between 550-599 as of April 2020, their average score went…

Based on the 2020 US Census, the US credit-eligible population (those over 18 years of age) is 258 million people. But how many of those consumers can obtain a FICO^® Score?  Calculations by FICO data scientists indicate that more than 232 million US consumers can be scored by the FICO^® Score suite. That is 90% of the credit-eligible US population. For most…

The FICO^® Score is the lingua franca, or common language, for the credit scoring industry. It serves as a broad-based, independent standard measure of credit risk. It is relied upon by stakeholders across the entire lending ecosystem – from regulators, investors and boards to consumers, lenders, and brokers – as a baseline metric for assessing credit risk th…

Last week, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae will begin considering borrowers’ rental payment history in its risk assessment process. This is a significant step forward in the use of alternative data in underwriting, and the FHFA and Fannie Mae are to be commended. Allowing consumers to demonstrate their regular rent payments will pro…

With non-mortgage write-off rates at the lowest YTD level seen since 2012[1], it’s easy to forget that the pandemic has, in fact, stressed many borrowers. In contrast to mortgage forbearances of six to 12 months, bankcard payment accommodations are typically just one to two months, with card lenders less likely to readily grant repeated accommodations.  Is the re…

A core pillar of promoting and sustaining widespread access to credit is ensuring high levels of financial literacy. Unfortunately, the U.S. lags behind many other countries in financial literacy, meaning millions of Americans lack the resources they need to chart a healthier financial future. But thanks to nonprofit organizations like Operation HOPE — which collabora…

Following the release of the FICO^® Score 10 Suite for lenders in 2020, FICO has announced the general availability of industry-specific versions of FICO^® Score 10 for U.S. auto lenders and credit card issuers. The industry-tailored scores in the FICO^® Score 10 suite are now available from all three major U.S. credit bureaus. Developed using rece…

Properly managed, the debt collections process can be an effective customer service and anti-attrition tool. Financial impairment resulting from unanticipated events are often temporary. Such events cast many borrowers into uncomfortable territory, creating what may be a defining moment in the relationship between them and their lenders. Lenders who get it right may e…

We all purchase insurance policies for one fundamental reason – to protect against unexpected events. No one plans to have an automobile accident or to have a tree fall on their home, and insurance provides valuable peace of mind that, should significant unexpected events such as these occur, they don’t translate into financial hardships or major life disruptions. Len…

If we think of a lending portfolio as a night club, its underwriting policy acts as the doorperson, checking IDs and making sure anyone trying to enter meets documented criteria. Most underwriting policies base acceptance on someone’s attributes and behavior at or before the time of application, considering how other similar applicants have behaved in the past. In bot…

FICO presented key insights from recent FICO^® Resilience Index research and early lender adoption use cases that surfaced during the pandemic-driven downturn at several key industry events early this summer. FICO also previewed FICO^® Resilience Index 2, the latest advance in FICO’s groundbreaking product, with more precise insight about a borrower’s resilience to…

Credit risk industry veterans who managed consumer loan portfolios through the Great Recession can recall the challenge of responding to swiftly changing borrower payment behavior and the resulting delinquency and default rate volatility during that time. Unable to pinpoint the sources of rapidly growing credit losses, lenders broadly and dramatically restricted acces…