New FICO “Resilience” Credit Score Could Help Borrowers

New FICO “Resilience” Credit Score Could Help Borrowers

As the U.S. economy reels from record-high unemployment and continued COVID-19 shutdowns, the Fair Isaac Corp. (FICO), a global analytics company and producer of the FICO credit score, released a new credit index recently it hopes will keep mortgage lending and other loans flowing during these unprecedented times.

After reviewing over 70 million consumer credit files from the Great Recession, FICO found that the majority of consumers - including those with lower credit scores - kept up with their financial obligations even during that time of double-digit unemployment and devastating housing market crash.  

In addition to using the traditional credit score, lenders will now be able to check the FICO Resilience Index to determine borrower credit-worthiness. The Resilience Index is a measure of borrowers’ ability to financially weather an economic storm. 

“Lenders and investors need to be able to evaluate and manage portfolios based on rapidly changing conditions, to further safety and soundness in credit as well as support the global economy,” said Sally Taylor, vice president and general manager, FICO Scores. “Consumers benefit when lenders have the tools to identify resilient borrowers, enabling lenders to price their products more competitively and to responsibly provide greater access to credit than they would otherwise be able to do.”

Instead of simply raising minimum credit scores, all lenders – including mortgage lenders - can use the new index to understand which borrowers can still manage debt well even if their credit scores are less-than-perfect. The traditional FICO credit score does not give a complete picture of a consumer’s financial health; it does not include whether a borrower is in mortgage forbearance or other important factors. Many consumers will benefit from having lenders look at more factors than a single number.

The Resilience Index will give more weight to lower account balances and credit utilization and put less emphasis on missed payments. While it does not include data about savings account balances or investments, it can still demonstrate to lenders which borrowers have a cushion of credit to handle serious economic downturns. This can be especially helpful to mortgage borrowers who have had to miss a home loan payment or two while in forbearance.

During the Great Recession, mortgage lenders stopped making loans to everyone except those with the highest credit scores. FICOs research shows that plenty of borrowers with lower scores could have successfully handled home loans during that period if given a change. The new Resilience Index is designed to keep that same problem from happening in today’s coronavirus-crisis environment.

"This innovation addresses an issue witnessed in the previous financial crisis, in that financial institutions have been limited in their ability to calculate how resilient individual consumers are in the presence of an economic downturn,” said Quantilytic principal Tom Parrent.  “Through more precise credit analytics, lenders concerned about increased economic stress can maintain lending to more consumers, while still protecting their portfolio. Broader lending to more resilient borrowers may even soften the impact of a downturn should it occur.”

Comments

GET RICH WITH BLANK ATM CARD, Whatsapp: +18033921735 I want to testify about Dark Web blank atm cards which can withdraw money from any atm machines around the world. I was very poor before and have no job. I saw so many testimony about how Dark Web Online Hackers send them the atm blank card and use it to collect money in any atm machine and become rich {DARKWEBONLINEHACKERS@GMAIL.COM} I email them also and they sent me the blank atm card. I have use it to get 500,000 dollars. withdraw the maximum of 5,000 USD daily. Dark Web is giving out the card just to help the poor. Hack and take money directly from any atm machine vault with the use of atm programmed card which runs in automatic mode. You can also contact them for the service below * Western Union/MoneyGram Transfer * Bank Transfer * PayPal / Skrill Transfer * Crypto Mining * CashApp Transfer * Bitcoin Loans * Recover Stolen/Missing Crypto/Funds/Assets Email: darkwebonlinehackers@gmail.com Telegram or WhatsApp: +18033921735 Website: https://darkwebonlinehackers.com

Evelyn Martinez | Feb 01, 2024
Error:
Please enter this text

Comment Submitted!