FICO® Score Remains the Most Widely Used Credit Score in the Securitization Market, Keeping Lender Confidence
Study finds more than 95% of asset-backed securitizations rely on FICO® Scores
“By far, FICO Scores are the dominant method to measure asset-backed securitization risk. There is some noise claiming alternative scores have traction, but if you look at the few firms that moved away from the FICO Score, you will often see deteriorating loan losses. Testing internal scores is one thing; moving away from the industry standard is another,” said
The study continues a 60-month review process and confirms the FICO® Score remains the dominant credit score used to assess credit risk in the securitization market. As lenders continue to navigate economic uncertainty, while facing rising interest rates and consumer price increases, lenders have continued to rely on FICO Scores when they brought asset-backed securitizations to
FICO® Scores are used throughout the credit lifecycle, from acquisitions to applications, and credit management. One reason that the score plays such an important role in the ABS process is that it is a risk management metric used everywhere throughout the payment function. Lenders understand what the FICO Score means and know it is predictive across consumer collateral classes.
For more information about the predictive power of FICO® Scores and the newest and most powerful FICO Score, FICO® Score 10 T, visit: https://www.fico.com/en/latest-thinking/white-paper/fico-score-10-and-fico-score-10-t-model-assessment.
About FICO
FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 215 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in nearly 120 countries do everything from protecting 2.6 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by 90% of top US lenders, is the standard measure of consumer credit risk in the US and has been made available in over 40 other countries, improving risk management, credit access and transparency. Learn more at www.fico.com.
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Source: FICO