90% of Credit-Eligible US Population Can Be Scored by FICO Score Suite
By leveraging powerful and relevant alternative data that provides a more complete picture of borrower credit risk, the FICO Score suite helps to identify those previously non-scorable consumers
The FICO® Score is the independent standard measure of consumer credit risk used by top lenders in the US. For most of the credit-eligible US population there is sufficient traditional credit bureau data available for calculating a FICO Score. However, some 28 million consumers have minimal data available in their traditional credit bureau files, and another 25 million are ‘credit invisible’ and have no traditional credit bureau data at all. An independent study conducted by the
The profiles of consumers that lack sufficient traditional credit bureau data can be varied and include consumers who are new to credit (e.g., students, recent immigrants), and credit retired, and those who have not used credit in six months or more, people who lost access to credit due to economic difficulty, and those who have no credit bureau record at all.
Over the past decade, FICO has explored novel approaches to credit scoring and developed innovative new scores, which augment traditional credit bureau data with rich alternative data, such as telecom, utilities, public record, and checking account data. With these scores, the FICO® Score suite can deliver reliable credit scores for more than 27 million additional people. FICO research shows that not only does the FICO Score suite deliver scores on more consumers, but these consumers are more likely to fall in the “new to credit” and “no credit bureau record” segments. These segments tend to be early in their credit journey, with a strong appetite and need for credit.
“Safety and soundness are at the heart of every credit scoring solution FICO develops,” said
When comparing the suite of FICO® Scores to a benchmark score that was built only using credit bureau data with a looser minimum scoring criteria, FICO was found to score over one million more consumers responsibly. That same benchmark score disproportionately scored more consumers in the “lost access to credit” segment. This segment is unlikely to benefit from having a credit score based solely on traditional credit data, which consists largely of past blemished credit. Without positive alternative data flowing into their files to offset the negative data in their traditional credit files, these consumers will likely score too low to obtain credit.
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