TransUnion and Fico unveiled the Fico Auto Score 9 XT — a new score that incorporates alternative data, the companies announced yesterday.
Based on TransUnion’s CreditVision credit report, the new score brings discerning capabilities to lenders seeking ways to learn the shape of borrowers’ financial situation, beyond a momentary credit status.
“CreditVision allows the lenders to see if borrowers are revolving or transacting on their loans,” said TransUnion’s Senior Vice President of Financial Services Jason Laky told AFN. “A ‘Revolver’ is a consumer who carries a credit card balance from month-to-month. A traditional view of a consumer will only show the existence of a balance … but trended vision allows us to see if the consumer pays none, some, or all of their balances in a given month.”
Some new trends revealed by the alternative credit score include making on-time payments, paying more than the minimum amount due, reducing total amounts borrowed, or decreasing utilization over time. Added differentiated elements include unpaid medical accounts that have already gone into collections and unpaid non-medical accounts already put into collections.
According to Executive Vice President of TransUnion’s financial services businesses unit Steve Chaouki, the inclusion of CreditVision in the new score “enables dealers and lenders to take these behaviors into account,” he said. “This is especially important because a traditional credit report may tell you a consumer has $7,000 in credit card debt, but one using trended data will show you whether they have built up or paid down that balance over time.”
In short, the new ratings extends the data ordinarily used to rate a finance applicant 30 months into the past, instead of just a current snapshot of the applicant’s likelihood to default at time of application.
“Fico Auto Score 9 XT is the latest innovation from Fico designed to address the interests of both lenders and consumers,” Executive Vice President of Scores at Fico Jim Wehmann said in the release. “We’ve worked with TransUnion on a score that examines the way a consumer’s behavior is evolving. This helps creditworthy consumers qualify for the best credit terms available to them, and helps auto lenders expand their portfolios safely by making more precise decisions about loan terms.”
The new credit score will also be made available through the national credit reseller ProMax Unlimited, according to the release.