Ranking UK Consumers’ Credit Capacity

As the UK economy continues to improve, lenders are increasing lending again — in a survey that FICO will announce next week, 100% of UK risk managers who responded said that lending more to consumers was a priority for 2014, and 27% said it was a top priority. At the same time, lenders are cautious about taking on additional risk.

This is what makes the FICO® Credit Capacity Index™ so attractive. This score rank-orders consumers by their ability to handle additional credit, which could be fundamental in helping UK lenders improve profitable lending growth.

Our latest validations show the strength of the FICO Credit Capacity Index, built on Equifax’s market-leading risk score, Risk Navigator 4 (RN4). We applied CCI to 275,000 UK consumer credit applications for credit line increases, current accounts, credit cards and personal loans. The performance of these accounts a year later, as well as the estimated performance for consumers who were declined, showed that CCI used with RN4 strongly rank-ordered borrowers.

For borrowers who applied for a current account or personal loan, the ratio of good payers to those who had credit problems a year later was six times greater for borrowers with high CCI scores than for those with low CCI scores. For credit cards the ratio was 15 times higher for high-scoring applicants than for those with low scores.

Information on the FICO Credit Capacity Index and other jointly offered solutions from Equifax and FICO in the UK is available at www.efxfico.com.