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When we released the FICO^® Resilience Index in late 2019, we were often asked, “How do you know it will work in the next recession, if it was developed based on the Great Recession?” As the economic uncertainty due to the COVID-19 pandemic mounted, this question gained urgency. But with limited delinquency data being reported, we explored other means to help our cl…

The COVID-19 pandemic cast a huge shadow on the financial services worldwide. The FICO Blog posts last year reflected that – we wrote about everything from the impact on collections, proactive lender communications with consumers, issues with fraud, and of course, how FICO^® Scores were impacted. We hope that what readers learned helped instill confidence in keeping…

Early in the COVID-19 pandemic, FICO data scientists discovered that the FICO^® Resilience Index was a strong predictor of the likelihood that consumers were receiving loan accommodations such as payment deferrals and forbearances following implementation of the CARES Act.   In the months following the early summer peak in loan accommodations, FICO analysts won…

The FICO^® Resilience Index is a new analytic designed to rank-order consumers according to their resilience to a downturn in the economy. It is built to reveal “latent” credit risk that manifests during periods of economic stress by providing additional rank-ordering of credit risk within narrow FICO^® Score ranges. As the FICO^® Resilience Index is a powerful a…

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…

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…

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…

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…

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…

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…

Today, FICO announced the FICO^® Resilience Index, a new analytic tool designed to complement the industry standard FICO^® Score.  During economic uncertainty, lenders and investors need to be able to evaluate and balance portfolios based on rapidly changing conditions.  This helps further the safety and soundness in credit, as well as support the global…