FICO Survey: Lenders Predict U.S. Consumer ‘Credit Gap’ Will Disappear

Credit card account balances expected to rise as consumers become more comfortable with debt

SAN JOSE, Calif. — July 9, 2013 — In its quarterly survey of U.S. bank risk professionals, FICO (NYSE:FICO), a leading predictive analytics and decision management software company, found that lenders expect demand and supply for consumer credit to reach equilibrium in the second half of 2013. Sixty percent of respondents expected both the amount of credit requested by consumers and the amount of credit extended by lenders to increase over the next six months.

“This is the first time since we initiated the survey in 2010 that expectations for the growth of credit demand did not exceed expectations for the growth of credit supply,” said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. “This shows the strength of the U.S. economic recovery and is in sharp contrast to what we see in Europe. Findings of our latest survey of European bankers, which we will release next week, show that twice as many UK lenders think the amount of credit requested will rise, compared with those who think the availability of credit will do so.”

The U.S. survey, conducted for FICO by the Professional Risk Managers’ International Association (PRMIA), also found that 61 percent of bankers surveyed expected the average credit card balance to increase during the next six months. Just 26 percent of respondents expected delinquencies on credit cards to increase.

“These results say quite a bit about the psychology of borrowers and lenders,” Jennings continued. “After years of caution, lenders are now in growth mode and feeling good about extending credit. But I find the borrower side of the equation even more intriguing. It appears that borrowers are beginning to shed the frugal habits that helped them deleverage to the tune of more than a trillion dollars since 2008.”

Delinquencies expected to drop, but student loans still problematic
Most respondents expected to see decreases in delinquencies on nearly every type of loan, except student loans. The percentages of respondents expecting delinquencies to remain steady or decrease during the upcoming six months were as follows:

• Car loans	76 percent
• Credit cards	75 percent
• Home equity lines	85 percent
• Residential mortgages	88 percent
• Small business loans	77 percent
• Student loans	44 percent

Once again, student loans were the sole area of pessimism. This is the seventh consecutive quarter of significant concern about delinquencies on student loans.

Historical trends
Nearly 52 percent of respondents expected requests for credit-line increases to rise, while 3.5 percent expected such requests to fall – the smallest number ever seen in this survey. Just 7 percent of respondents expected credit card balances to decline, the lowest figure in the history of the survey.

Thirty-six percent of respondents expected the approval rate for new credit to increase, while only 15 percent expected a decrease, the lowest result ever recorded in the survey. Forty-seven percent of respondents expected mortgage delinquencies to decline, which is the most optimistic result in the survey’s history.

A detailed report of FICO’s quarterly survey is available at
https://www.prmia.org/sites/default/files/references/FICO2ndQuarterJuly2013.pdf. The survey included responses from 149 risk managers at banks throughout the U.S. in May and June 2013. FICO and PRMIA extend a special thanks to Columbia Business School’s Center for Decision Sciences for its assistance in analyzing the survey results.

About PRMIA
The Professional Risk Managers’ International Association (PRMIA) is a higher standard for risk professionals, with 65 chapters and more than 85,000 members worldwide. A non-profit, member-led association, PRMIA is dedicated to defining and implementing the best practices of risk management through education, including the Professional Risk Manager (PRM) designation and Associate PRM certificate; webinar, online, classroom and in-house training; events; networking; and online resources. More information can be found at www.PRMIA.org.

About FICO
FICO (NYSE: FICO) is a leading analytics software company, helping businesses in 80+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company’s groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption — such as the FICO^® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health. FICO: Make every decision count™.

For FICO news and media resources, visit www.fico.com/news.

Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements contained in this news release that relate to FICO or its business are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the success of the Company’s Decision Management strategy and reengineering plan, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, its ability to recruit and retain key technical and managerial personnel, competition, regulatory changes applicable to the use of consumer credit and other data, the failure to realize the anticipated benefits of any acquisitions, continuing material adverse developments in global economic conditions, and other risks described from time to time in FICO’s SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2012 and its last quarterly report on Form 10-Q for the period ended March 31, 2013. If any of these risks or uncertainties materializes, FICO’s results could differ materially from its expectations. FICO disclaims any intent or obligation to update these forward-looking statements.

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