Drexel University’s LeBow College of Business and CIO.com have named analytic software firm FICO a winner of the Analytics 50 Awards for the second year in a row. The awards program honors organizations using analytics to solve business challenges. FICO received the award for FICO® Score XD, which leverages groundbreaking analytic technologies and alternative data to help safely and responsibily expand credit access.
For more information check out the full award article.
Led by Radha Chandra, principal scientist in the Scores business unit at FICO, the FICO analytic development team posed the question: Can alternative data expand credit access? After extensive research and validation, FICO launched FICO Score XD. Through the development of FICO® Score XD, FICO provides a potential onramp to credit access for the majority of 50+ million Americans who are identified as ‘unscorable’.
In addition to traditional credit data, FICO® Score XD consumes alternative data from telco, cable, and other payment history, plus public record and property data. One specific design goal of FICO Score XD was to mirror the standards of the traditional FICO Score – same 300-850 score range, similar relationship between a given score and likelihood of repayment, and same characteristic logic and treatment.
FICO® Score XD uses positive and negative data from National Consumer Telecom and Utilities Exchange, Inc. (NCTUE) including new connect requests, payment history, current and historical account status and LexisNexisRisk Solutions including property ownership records, frequency of residential moves, plus bankruptcies, evictions, and liens. All data sources comply with the Fair Credit Reporting Act (FCRA), the federal law that regulates how consumer reporting agencies use data.
While FICO Scores based on traditional credit data remain the cornerstone of the FICO business, this initiative helps banks and other lenders expand their addressable market by leveraging scores that are built on models utilizing alternative data. Findings demonstrate that consumers with a high FICO® Score XD who go on to obtain credit, maintain a high traditional FICO score in the future – 49% scored 700 just 24 months later.
“FICO’s pioneering analytics are a key driver to our commitment to financial inclusion and provide lenders with a reliable, broad-based risk score that enables precise assessment of creditworthiness for consumers,” said Ethan Dornhelm, vice president, Scores and Analytics, FICO. “It is an honor that FICO – and Radha Chandra on our team – have been recognized by Drexel University for our work to help millions more people gain access to credit.”
FICO Score XD research and solutions have also paved the way for similar initiatives in Mexico, Russia, Turkey and now India. The latest solution – FICO Score X Data for India – was recently announced at Money 20/20.
The Analytics 50 is a collaboration between Drexel University’s LeBow College of Business and CIO.com to recognize companies using analytics to solve business challenges. Honorees were selected by a panel of researchers and practitioners based on the complexity of the business challenges they faced, the analytics solutions implemented, and the solutions’ business impact on the organization.