The Fair Isaacs Corporation has a host of analytical models which it has devised and sells to lenders who use them to make increasingly accurate risk assessments on consumers. Based on credit information these models take your credit score to new levels of predictive analysis, allowing businesses the opportunity of building a data base of low risk customers who are prime targets for selling new products to. Businesses can then target new customers more effectively and work to promote customer loyalty.
There are Fico models which can predict which existing customers are potentially credit risks, thus allowing lenders to take pre-emptive measures to prevent financial losses. There are score models developed for mortgage lenders, insurance companies, credit card issuers, and to predict credit behaviour of those who remain the untapped market of 50 million Americans who currently use no credit.
Increasingly lenders are making additional use of these analytical tools as they can improve their own corporate image by reducing their lending to high risk default customers, whilst reducing their own losses at the same time. Retaining low risk customers as loyal customers, and attracting new customers who are likely to become loyal customers, is a much more cost efficient way to minimise losses than targeting random sectors.
These are just some of the current Fico analytical models available to lenders, which have a direct impact on how consumer applications for credit are analysed.
1. Fico Scores: The analytical tool many are all too familiar with as the score determines how likely you are to obtain credit, a mortgage, insurance, and preferential interest rates. Lenders use the score range of 300-850 to predict which customers are more likely to pay their future credit obligations.
2. Fico Insurance Risk Scores: Used by the insurance industry to determine if you are likely to be a responsible customer that takes a responsible attitude to auto and property maintenance. http://www.helium.com/items/1854237-fico-insurance-risk-scores
3. Fico Mortgage Scores: This is used by mortgage providers as an additional assessment tool to make more predicatively accurate credit decisions for both current and future homeowners.
4. Fico Bankruptcy Scores: These models are used by lenders to identify pre-bankruptcy signs and thus enable lenders to take early action to prevent and minimise their own losses.
5. Fico Expansion Scheme: A model with huge growth potential as it provides lenders with predictive credit use of those who have no Fico score yet, by analyzing alternative data from public records, utility payments, checking accounts and other sources. This model gives huge potential to lenders as those new to credit are more likely to remain loyal customers to those lenders who are willing extend credit to them for their first time use of credit. http://www.helium.com/items/1833711-build-credit-the-fico-expansion-scheme
6. Fico Credit Capacity Index: Used by lenders to accurately predict and target customers who will be more likely to manage additional incremental future debt and reduce exposure to those customers who are assessed as more likely to be delinquent. http://www.helium.com/items/1854234-fico-credit-capacity-index
There are other analytical tools available from Fico for lenders to more effectively streamline their customer base into a profitable one. Increasingly the consumer’s way of handling credit responsibly will become even more influential in their lives than it already is, so it has never been more important to ensure that your Fico credit score is nothing less than excellent.