FICO® Score Distribution Remains Mixed

Based on a fresh look at the national distribution of FICO® 8 Scores, it appears that the profile of credit risk for U.S. consumers, while still mixed, may be slowly returning to a prerecession pattern. As my colleague Andrew Jennings has noted, people with higher FICO® Scores have generally increased...

Dark Clouds Looming Over Student Loan Industry

My earlier blog post quantified some of the trends we have been seeing in the US student loan industry, namely the precipitous increase in student loan debt. Our ongoing analysis has found another disturbing trend: recent vintages of student loans have noticeably lower FICO® Scores than earlier vintages. This chart...

Patterns of New-to-Credit Consumers

What's the credit profile of “new-to-credit” consumers? FICO staff recently presented new research on this topic at the Consumer Financial Protection Bureau’s Financial Empowerment Convening. Our analysis showed that for this population learning how to use credit, responsible management does lead to improving credit scores and greater access to credit....

No Shortcuts to Objectivity

My colleague Frederic Huynh recently posted that mortgage short sales continue to represent high credit risk in our FICO® Score algorithm. Some readers have responded that our predictive science may be a tad too rigid, which naturally begs the question: Are they right? They point out that starting in November,...

Is Growing Student Loan Debt Impacting FICO® Scores?

As students incur more student loan debt, lenders and investors in student loans are asking how this is affecting US consumers’ FICO® Scores. New FICO research provides interesting insights. With education costs rapidly outpacing inflation, more consumers are taking out student loans to pay for their education. Looking at a...

FICO® Scores Reflect Slow Economic Recovery

Our FICO Labs team has taken a fresh look at national distribution of FICO® 8 Scores. With a couple of interesting exceptions, we found that consumer scores are continuing their slow return to a pre-recession pattern. The first two years of the recession (2008-2009) moved the scores for millions of...

Do credit scores have a disparate impact on racial minorities?

I am troubled when I read allegations in the press that FICO® Scores discriminate against people of color. That’s because a credit score is nothing more than the output of a mathematical formula built to rank-order the likelihood that a person will repay the debts they have incurred. To say...

What is “Alternative” Credit Data?

When you stop to think about it, the term “alternative credit data” is a catch-all phrase to describe data that is not currently reported on mainstream credit reports. But what, in reality, is alternative about it? For millions of people, it may not be alternative data but the only credit...

Are Short Sales Really That Bad?

My colleague Joanne Gaskin wrote a great post about the impact to the FICO® Score from short sales and other mortgage stress-related events. One of the questions we get asked most often is whether it remains appropriate for the scoring model to treat a short sale in a manner similar...

A Better Way to Treat Inquiries

In my last post, I discussed the specialized logic in the FICO® Score that accounts for loan rate shopping by consumers. As a quick refresh, this includes the score treating all student loan, auto and mortgage inquiries within a 45-day period as a single inquiry—what’s called an inquiry “deduplication (dedupe)...