Increasing financial inclusion is our DNA
Why Alternative Data Matters
Drawing on reliable new sources of data, FICO scores more creditworthy people who are unable to obtain credit using traditional credit bureau data alone.
FICO pioneered the development of scoring analytics over 27 years ago that helped to democratize access to credit. We have led the industry ever since.
To provide more people with reliable credit scores, scoring must include truly alternative data, which is not housed at the credit bureaus. For example, in the US the credit bureaus have utility data for just 2.4 percent of consumers and cell phone bill data for only 2.5 percent of consumers.
Today, FICO is responsibly using new and regulatory compliant alternative data sources to further facilitate credit access and give reliable FICO Scores to individuals who are otherwise ineligible for a traditional credit score.
FICO thoroughly vets an alternative data source before including it in our solutions, on dimensions including regulatory compliance, accuracy, and predictive efficacy.
FICO has built analytic models for multiple markets that consider alternative data, such as bill payment and non-financial data (like mobile device and retail purchase information) in addition to traditional financial data. These analytics are generally designed as an extension of the traditional FICO® Score, with the same or a similar score range (e.g., 300-850) and a similar odds-to-score relationship.
Our approach ensures the integrity of our scoring standards as well as the expansion of credit scoring to a broader, more inclusive and more diverse group than ever before.
Credit Scoring Myths
Leveraging Alternative Data to Extend Credit to More Borrowers
You may have heard that alternative data holds great potential for expanding access to credit to more consumers to help them achieve their financial goals. Indeed, more data can enable credit score providers like FICO to provide a more complete snapshot of consumers’ credit behavior and potential risk. While FICO has been the leader in developing innovative ways to incorporate new and regulatory compliant alternative data into credit scores, there are still barriers to fully unlocking the potential of alternative data....
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Does VantageScore Use Alternative Data?
In the era of Big Data, so-called alternative data holds a special promise — to shine a new light on consumer behavior. When it comes to credit scoring, alternative data means data not being used today for risk assessment, and specifically data not found in the credit bureaus. Lenders hope scoring this data could allow them to make faster, better decisions on people who don’t have FICO® Scores — the “unscorables” with sparse or no credit...
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Articles & Resources
Can scoring trended data help lenders expand credit access?
Americans who don’t have a FICO score present both an opportunity and a challenge for lenders. Lenders are keen to extend credit to consumers in new market segments, but need to ensure they’re making risk-aware decisions. Some lenders are asking can scoring trended data, or more accurately trended credit bureau data, as some credit score companies claim, actually help expand credit access to these consumers? The short answer is no and let’s discuss why...
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Can Alternative Data Expand Credit Access?
Widespread adoption of credit scoring by financial institutions over the past 25 years has made credit available and affordable to a majority of US consumers. Is there an opportunity to go further, opening onramps to credit for a much broader population? Can scoring help lenders safely and responsibly extend credit to consumers who traditionally don’t receive credit scores because of insufficient or nonexistent credit bureau information?
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FICO Score XD: Expanding Credit Opportunities
Most Americans have FICO® Scores – the three-digit number that lenders use to make credit decisions. But more than 50 million American adults don’t. Here’s why, and what FICO is doing about it. To Solve this Problem, Credit Bureau Data Isn’t Enough When bureau data gets sparse, the score’s predictive power drops and it becomes unreliable. Alternative data builds the score’s predictive power and reliability
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Can scoring trended data help lenders expand credit access?
Bankcard issuers have a new opportunity to extend credit to millions of U.S. consumers who otherwise cannot be scored safely, either due to insufficient or stale data in traditional credit bureau files. FICO introduces FICO® Score XD—developed in partnership with LexisNexis® Risk Solutions and Equifax® — this new score leverages alternative data sources to give issuers a second opportunity to assess otherwise unscorable consumers.
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