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Home Credit China Cuts Risk by 25 Percent on Consumer Loans to Thin File Applicants

Global non-bank lender wins FICO® Decisions Award for Financial Inclusion using FICO® Score

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Scoring Solutions

BEIJING — March 26, 2020


  • Home Credit has cut credit risk on point-of-sale (POS) loans by 25 percent and online loans by 15 percent, without reducing lending volume.
  • By incorporating the FICO® Score X Data, Home Credit can underwrite objectively new clients not covered by traditional scoring due to a lack of credit bureau history.
  • Home Credit won a 2019 FICO® Decisions Award for Financial Inclusion.

Home Credit, a global non-bank consumer lender, has successfully reduced its credit risk while maintaining loan volumes and keeping approval rates steady by incorporating the FICO® Score X Data to optimize its loan process in China. The score was used in addition to data from loan applications, Home Credit’s existing internal scorecards, and other external data sources to cut credit risk on point-of-sale (POS) loans by 25 percent and online loans by 15 percent compared to the old generation of models.

For more information: https://www.fico.com/en/solutions/fico-scoring-solutions-for-financial-inclusion

The FICO® Score X Data uses alternative third party to produce a score that is highly predictive for consumers who are both experienced or new to credit.

The introduction of the score has enabled Home Credit to underwrite and evaluate new clients with a thin file more objectively. This has been a big focus for the business in response to strong market demand for consumer loans in China.

“We have always strived to improve our risk assessment for new clients while keeping the approval rate at a reasonable level so that we can provide a service to as broad a part of the population as possible,” said Tomas Klinger, Decision Science and Data Director at Home Credit. “This type of financial inclusion is good for the consumer and good for our business. By increasing our volumes and better understanding the behavior of our clients we can look to offer them larger and longer-term loans in the future at a lower risk.”

Home Credit’s risk assessment utilizes a similar structure to the FICO® Score – it builds a sub-score for every data source and the final scorecard is then a relatively simple combination of those components. This allows Home Credit to calculate the value and importance of each contribution to the final score as well as the cost-benefit analysis.

This level of control allows Home Credit to adjust quickly to market changes or data outages in China. Using the FICO® Score X Data, Home Credit has boosted its scorecard performance by 2 gini points and processed more than 1.2 million applications a month, meaning it can now lend to a larger portion of Chinese consumers at significantly lower risk.

“Home Credit has successfully expanded its acquisition business to help more consumers gain access to credit,” said Sandy Wang, managing director of FICO China. “The team has been methodical in building a dynamic and robust scoring tool and Home Credit participates on the development. Home Credit’s feedback and cooperation has been valuable for us when constantly adjusting and recalibrating the score to adapt to market headwinds to ensure that the model provides a fair assessment of consumer credit risk. They are one of our most sophisticated clients in terms of advanced analytics.”

For its achievement, Home Credit was awarded the 2019 FICO® Decisions Award for Financial Inclusion.

“Advanced data analytics is embedded in Home Credit’s entire loan process and many of its customers were able to take out their loans via the lender,” said Sharon Kimathi, editor at FinTech Futures, one of the FICO Decisions Awards judges. “By overcoming the information limitations of traditional scoring and utilizing the FICO Score to optimize risk assessment, Home Credit has created a successful credit scoring model and, in the process, provided lending to underserved consumers.”

About Home Credit
Home Credit Consumer Finance Co., Ltd. (“HCCFC”) is a licensed consumer finance company, which is invested by a world leading consumer finance provider Home Credit N.V. and started its operations at the end of 2010. As at June 30, 2019, HCCFC has presence in more than 300 cities covering 29 provinces together with municipalities directly under the central government in China. By working closely with national retail chains such as D.Phone and Suning and cooperating with over 260,000 retail partners, it has set up over 260,000 POS outlets across the country. HCCFC has so far served over 50 million customers. Meanwhile, HCCFC is accelerating its digitization as well. Over 30 million customers have registered Home Credit’s mobile app year-to-date and thus entered its service ecosystem. Driven by its superior ability of data capture and analysis and by leveraging the Big Data and bio-identification technology, HCCFC is able to integrate the cutting-edge risk management capabilities into each link of its business process, thus efficiently serving its customers with FinTech.

Home Credit N.V. (“HCNV”) is the Netherlands-based holding company for Home Credit’s global platform, which centrally manages its core strategy, technology, risk, product and funding functions while adapting to local market needs. HCNV is an emerging markets’ consumer finance specialist with operations in (1) Central & Eastern Europe including Czech Republic and Slovakia; (2) the Commonwealth of Independent States including Russia and Kazakhstan; (3) China and (4) South & South East Asia including India, Indonesia, Vietnam and Philippines. Founded in 1997, HCNV focuses on responsible lending primarily to people with little or no credit history and is fully licensed to operate in its chosen markets. HCNV drives and broadens financial inclusion by providing financing to under-serviced populations wherever and whenever they need through its omni-channel distribution network, while providing a positive and safe borrowing experience. Our vision is to make financial services easy, simple and fast. As at June 30, 2019, HCNV has so far served over 123.7 million customers through a distribution network comprising approximately 453,539 points of sale, loan offices, branches, post offices and ATMs. More information on HCNV is available at www.homecredit.net.

About the FICO® Decisions Awards
The FICO Decisions Awards recognize organizations that are achieving remarkable success using FICO solutions. A panel of independent judges with deep industry expertise evaluates nominations based upon measurable improvement in key metrics; demonstrated use of best practices; project scale, depth and breadth; and innovative uses of technology. The 2019 judges are:

  • Sharon Kimathi, editor at FinTech Futures
  • Leslie Parrish, analyst – retail banking at Aite
  • Denise Sleem, functional specialist at Medscheme, 2018 winner
  • Alex Woodie, managing editor at Datanami
  • Les Yeamans, founder at RT Insights

The winners of the FICO Decisions Awards will be spotlighted at various FICO events in 2020 and win tickets to FICO® World 2021, the Decisions Conference, April 2021 in Orlando, Florida.

About FICO
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956 and based in Silicon Valley, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 195 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, manufacturing, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and rental cars are in the right place at the right time.

Learn more at www.fico.com.

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