Predictive Scores For Auto Loans and Bank Cards

FICO, a provider of analytics and decision management technology, announced the release of its newest scores targeted specifically to the automobile lending and bankcard industries. Credit reporting agency TransUnion is making the scores available to lenders and issuers.

The new products improve upon the predictive performance of FICO industry scores now in use while providing auto lenders and card issuers with refined risk performance classification, enhanced segmentation capabilities, and protection against authorized user account "piggybacking," while supporting compliance with federal fair lending and credit reporting regulations.

The new FICO 08 score for auto loans is expected to provide a significant increase in predictive power compared to previous versions of the FICO scoring model. Using the new score, auto lenders may be able to identify as many as 5 percent to 15 percent more potential delinquencies among consumers as they could with the previous FICO auto score. Use of the scores can help lenders make better informed decisions to as they seek to increase account bookings while reducing delinquencies and losses.

The new FICO scoring model for bankcards is designed to give card issuers greater predictive capabilities in their origination and account management decisions. Product validation testing found that the new scores could potentially increase issuers’ delinquency prediction rates by 6 percent to 12 percent compared to the previous FICO bankcard score. In addition, the new score includes refinements to address non-prime consumers and those with thin credit histories.