“Financial inclusion matters — we know it theoretically but do we really understand how much it counts?”
That’s what FICO EVP of Scores Jim Wehmann asked in his keynote address today at FICO World 2016. To find out, Wehmann interviewed consumers recently at the Mall of America about their credit scores and their financial dreams. The video of these consumers provided a highlight of the conference, and also put a human face on the struggles of people rebuilding their credit.
One consumer, Ron, had had credit problems that sent his FICO Score into the 400s — meaning no lender would offer him credit. Rather than declare bankruptcy, Ron decided to rebuild his credit, working with Lutheran Social Services.
“I’m not getting back on my feet, I’m getting ON my feet,” Ron said. He was aiming to get a score above 620, which would make him eligible for card debt consolidation. During their interview, Ron checked his FICO Score, which had reached 623.
“It’s ironic that the person most excited and happiest with his score in my interviews was the one with the lowest score,” Wehmann said. “During the great recession, millions of people went through financial distress through no fault of their own. The great thing about the FICO Score is that it’s not static. You can rebuild your credit and rebuild your score.”
Wehmann also met a woman who had lost her real estate job in 2007, and shortly thereafter her marriage, all while coping with a special-needs child. Due to her financial difficulties, she had lost all access to credit, and as a result no FICO Score could be calculated.
“There are 53 million people without a FICO Score in the US,” Wehmann said. “This is part of the reason we are announcing FICO Score XD with our partners LexisNexis and Equifax. We think this score will give hope to millions of Americans who want access to credit.”
Wehmann noted that 150 million credit accounts in the US now receive free FICO Scores through their lenders, who participate in the FICO Score Open Access program. These range from large banks like Barclays to small credit unions like Firefighters First, the credit union for Los Angeles firefighters. And while the interviews featured Americans, Wehmann emphasized FICO is focused on improving credit inclusion worldwide. He announced score development projects in China, India, Europe and Africa.
“Behind every three-digit FICO Score is a human being on their own credit journey,” Wehmann said. “Because the FICO Score is based on your payment history, anyone, at any age and in any profession, can have a high FICO Score. Even when situations you can’t control hurt your credit, such as a medical problem or a layoff, you can rebuild it.”