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Radha Chandra, Principal Scientist, Scores Analytic Development




Consumer Credit

Business Challenge

In the U.S., more than 28 million consumers — including coming-of-age populations, recent immigrants, and those re-establishing credit — do not have enough data on file at the nation’s traditional credit reporting agencies (CRA) to generate a FICO® Score. An additional 25 million have no credit file on record.

To expand lending into this population of consumers, lenders needed a reliable, broad-based risk score that would enable precise assessment of creditworthiness for this historically underserved segment. Research investigated the alternative data being collected by some U.S. CRAs but not traditionally used in credit assessment.

Analytics Solution

After extensive research and validation, FICO launched FICO® Score XD. In addition to traditional credit data, FICO® Score XD consumes alternative data on telco, cable, and other payments, plus public record and property data. One specific design goal of FICO® Score XD was to mimic the look and feel of the traditional FICO® Score: same 300-850 score range, similar relationship between a given score and likelihood of repayment, and same characteristic logic and treatment. Subsequent out-of-time validations across numerous datasets have confirmed that FICO accomplished these goals.


Throughout year-long pilots with many of the largest U.S. lenders, the majority of credit applicants who were previously unscorable could be scored with FICO® Score XD. Also discovered was that as many as half of the credit applicants had scores of at least 620, which is a common threshold for loan underwriting. Consumers with a higher FICO® Score XD who subsequently obtain credit go on to maintain high traditional FICO® Scores in the future: 49 percent scoring 700 just 24 months later. This can translate into mainstream financial opportunity for millions more Americans.

FICO pioneered development of scoring analytics, which enabled lending to be fair and dependent only on criteria relevant to risk. While scores based on traditional credit data remain the cornerstone of FICO’s business, this initiative is to help banks and other lenders to expand their addressable market by leveraging scores built on alternative data.