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Connecting decisions at originations

In a recent post, I made the case for why lenders must be able to consistently make profitable originations decisions in diverse and changing credit markets. As a result, it’s critical that origination solutions allow lenders to bring a wider range of analytics to bear on credit applications for sharper profit-loss estimations. They must make it easier to develop origination decision strategies for improved profitability and other business goals.

Building on modular SOA (service-oriented architecture) approaches, lenders can tailor decisioning processes to the specific requirements of multiple credit products and different regulatory environments. At the same time, they gain the efficiencies and economies of being able to share data, scores, business rules and other decisioning elements where appropriate.  

This approach enables lenders to make smarter decisions by connecting them. Specific origination decisions—such as pricing, credit line, terms and conditions—that may previously been made in sequential, unrelated steps, are bound more tightly together. Unified decisioning not only reduces processing time and cost, it helps lenders better understand interrelationships between various profit drivers, explore the trade-offs and balance multiple objectives in the best way for their business.

When it makes sense for their business, lenders can extend connections across credit product lines. They can make origination decisions at the customer level, reflecting the total profit potential of the relationship. Moreover when a common architecture underlies all customer lifecycle decisioning areas, lenders can bring insights from customer management, collections and fraud management into originations for even more profitable decisions.

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Andrew, can you tell me why the traditional score ranges that were provided on the old FCRA Credit Score Disclosure and listed on your Product Sheets and score distribution graph you provide now differ from the score ranges on the new Credit Score Exception Notice (Risk Based Pricing regulation) for the same FICO score models? For example FICO 8 is now 341-850 and FICO 4 is 300-839.

Andrew Jennings

Allen, thank you for your comment.

I believe you are referring to the difference between the score ranges for the general-risk FICO® Scores used today by the vast majority of lenders and the industry option scores. General risk FICO® Scores fall within the 300-850® score range. This score range was introduced to establish an easy-to-understand, common frame of reference for lenders and consumers. Industry-specific FICO® Scores, such as those for auto lending or bankruptcy prediction, were developed to accommodate the unique qualities of their industry and may have ranges outside the 300-850® score range.

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