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© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 1
© 2019 Fair Isaac Corporation. Confidential.
This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 2
© 2019 Fair Isaac Corporation. Confidential.
This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.
Through the Cycle FICO® Score Trends
And What They Tell Us About the Road Ahead
Ethan Dornhelm
VP – Scores and Predictive Analytics, FICO
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 3
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 33
“Sometimes the future is like the past,And sometimes it is not.But when it comes to what we know,The past is all we’ve got.”
– Karl Case
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 4
• What is Driving Shifts in the
FICO Score Distribution?
• What is Driving Shifts in the
Odds-to-Score relationship?
Key FICO® Score Through-the-Cycle Questions
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 5
National Average FICO® Score 8 Has Steadily Risen Over Past Decade
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 6
FICO Scorable Population Shows Improvement in Key Credit Metrics Over Past Decade
Credit Dimension
Credit MetricAs of:
Relative % Difference
Apr-09 Apr-19 2009 - 2019
Payment History % of population 30+ Days Past Due in Last Year 25.2 19.7 -22%
Payment History% of population 90+ Days Past Due on Auto Finance
Loans in Last 2 Years6.5 5.6 -14%
Payment History% of population 90+ Days Past Due on Bankcards in Last 2
Years12.9 8.6 -33%
Payment History% of population 90+ Days Past Due on Real Estate Loans
in Last 2 Years7.2 2.8 -61%
Amounts Owed Average Credit Card Utilization 46.4 33.5 -28%
Amounts Owed Average Credit Card Balances $6,947 $6,595 -5%
Length of Credit History
Average age of oldest trade 204 222 9%
New Credit % of population with 1+ inquiries in the past year 47.8 41.0 -14%
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 7
FICO Scorable Population Shows Improvement in Key Credit Metrics Over Past Decade
But Also Deterioration in Several Metrics Between 2014-2019
Credit Dimension
Credit MetricAs of:
Relative % Difference
Apr-09 Apr-14 Apr-19 2009 - 2019
Payment History % of population 30+ Days Past Due in Last Year 25.2 20.9 19.7 -22%
Payment History% of population 90+ Days Past Due on Auto Finance
Loans in Last 2 Years6.5 4.5 5.6 -14%
Payment History% of population 90+ Days Past Due on Bankcards in
Last 2 Years12.9 7.3 8.6 -33%
Payment History% of population 90+ Days Past Due on Real Estate
Loans in Last 2 Years7.2 6.4 2.8 -61%
Amounts Owed Average Credit Card Utilization 46.4 38.7 33.5 -28%
Amounts Owed Average Credit Card Balances $6,947 $5,911 $6,595 -5%
Length of Credit History
Average age of oldest trade 204 216 222 9%
New Credit % of population with 1+ inquiries in the past year 47.8 44.0 41.0 -14%
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 8
Are Credit Inactives and/or New Entrants The Key Driver in Average FICO® Score Change Over the Past Decade?
Credit Inactives
Scorable Throughout
New Entrants/Re-Entrants
April 2009
Scorable
Scorable
Not Scorable
April 2019
Not Scorable
Scorable
Scorable
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 9
Credit Inactives*: A Tale of Two Profiles
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
300-499 500-549 550-599 600-649 650-699 700-749 750-799 800-850
FICO® Score 8 Distribution April 2009
Scorable as of 2009, Credit Inactive as of 2019 Total U.S. Population
Sizing: ~40M consumer files
Average FICO® Score 8: 660
Voluntary vs Involuntary Inactives
*As of 2019, no updated credit account(s) in past 6 months
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0%
5%
10%
15%
20%
25%
300-499 500-549 550-599 600-649 650-699 700-749 750-799 800-850
FICO® Score 8 Distribution April 2019
Unscorable as of 2009, Scorable as of 2019 Total U.S. Population
New Entrants/Re-Entrants Skew Lower Than National Population
Sizing: ~45M consumer files
Average FICO® Score 8: 657
Median Age as of April 2019 = 27
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 11
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
300-499 500-549 550-599 600-649 650-699 700-749 750-799 800-850
FICO® Score 8 Distribution On Files Scorable in Both 2009 and 2019
April 2009 April 2019
Scoreable Throughout: Key Population Driving Score Distribution Upwards
Sizing: ~160M consumer files
Average FICO® Score 8 (2009): 694
Average FICO® Score 8 (2019): 723
29 Point Increase in Avg FICO Over Past Decade
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 12
• National Consumer Assistance Plan
(NCAP)
• FCRA-mandated Delinquency Purge
Impact of Deleted Negative Credit Data on FICO® Scores
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 13
National Consumer Assistance Plan (NCAP) and Impact on FICO®
Score
NCAP requires a minimum set of personally-identifiable
information (PII) on public records
• Impacted civil judgments and tax liens; no impact to bankrupt
public records
• Criteria initially implemented at all three CRAs by July 2017
• By mid-2018, all civil judgments and tax liens had been purged by
the three CRAs
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 14
NCAP Public Record Study Findings
No observed material impact to FICO® Score on the
total population
• Score distributions, risk prediction & odds-to-score
relationship unaffected
Modest impact to FICO® Score on the ~6% of the total FICO
scorable population that had a judgment or tax lien purged from
their file as a result of the NCAP criteria
• Median pre-NCAP FICO® Score 8 for this population is
562
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 15
Observed No Material Impact to FICO® Score 8 Cumulative Distribution
0
10
20
30
40
50
60
70
80
90
100
250 -499
500 -519
520 -539
540 -559
560 -579
580 -599
600 -619
620 -639
640 -659
660 -679
680 -699
700 -719
720 -739
740 -759
760 -779
780 -799
800 -819
820 -839
840 -900
Cu
mu
lative
Pe
rce
nt
Score
FICO® Score 8 PreNCAP FICO® Score 8 PostNCAP
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 16
Few Consumers Swap Above Cut-offs as a Result of NCAP
For cutoffs across the score spectrum, less than 0.25% of credit files are swapping above when comparing the Pre- and Post-NCAP scores
FICO® Score 8 Pre-NCAP
Above Cutoff Below Cutoff% Swapped Above with FICO® Score 8
Post-NCAP
580 83.4% 16.6% 0.21%
620 75.4% 24.6% 0.18%
660 66.5% 33.5% 0.22%
700 56.7% 43.3% 0.23%
740 44.7% 55.3% 0.18%
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 17
Bad Rates in Bankcard Originations Higher for NCAP-Impacted Population
Not Impacted
FICO® Score 8 Post-NCAP
% of New Bankcard Pop
90+ Bad Rate
< 500 1% 43.3%
500-519 1% 38.4%
520-539 1% 36.5%
540-559 2% 34.1%
560-579 3% 31.2%
580-599 3% 27.0%
600-619 4% 20.4%
620-639 5% 14.4%
640-659 6% 10.2%
660-679 7% 7.1%
680-699 8% 5.2%
700-719 8% 3.6%
720-739 8% 2.3%
740-759 8% 1.5%
760-779 8% 0.9%
780-799 8% 0.5%
800+ 20% 0.2%
Grand Total 100% 7.1%
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 18
Bad Rates in Bankcard Originations Higher for NCAP-Impacted Population
Not Impacted Impacted
FICO® Score 8
Post-NCAP% of New
Bankcard Pop90+ Bad Rate % of New
Bankcard Pop90+ Bad Rate % Increase in
Bad Rate
< 500 1% 43.3% 5% 48.0% 11%
500-519 1% 38.4% 4% 41.0% 7%
520-539 1% 36.5% 6% 38.4% 5%
540-559 2% 34.1% 9% 37.1% 9%
560-579 3% 31.2% 11% 34.5% 11%
580-599 3% 27.0% 12% 29.1% 8%
600-619 4% 20.4% 12% 22.8% 12%
620-639 5% 14.4% 11% 15.4% 7%
640-659 6% 10.2% 9% 11.2% 9%
660-679 7% 7.1% 7% 7.9% 11%
680-699 8% 5.2% 5% 6.2% 19%
700-719 8% 3.6% 3% 5.1% 44%
720-739 8% 2.3% 2% 3.8% 67%
740-759 8% 1.5% 2% 2.8% 91%
760-779 8% 0.9% 1% 2.2% 157%
780-799 8% 0.5% 1% 1.1% 137%
800+ 20% 0.2% 1% 0.9% 376%
Grand Total 100% 7.1% 100% 23.4%
Particularly
for those
with Prime
“Post-NCAP”
Scores
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 19
41.3%
16.5%
13.5%
11.1%9.2% 8.6% 8.1%
4.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
0-11 12-23 24-35 36-47 48-59 60-71 72-83 No Delinquency
Bad R
ate
(B
ad =
90+
dp
din
subsequent
24 m
onth
s)
# of Months Since Most Recent Delinquency*
*Delinquency = 30+ days past due
Years-Old Delinquency Data Still Materially Differentiates Risk
FCRA: Trade line delinquencies must be purged from file after 7 years
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 20
Study: FICO® Score Dynamics of Great Recession-Era Delinquent Consumers
FICO® Score 8 dynamics examined over time on three populations
2017
Recession-era missed payments purged per FCRA
Population #2:
“Fully Recovered”• ~4 million consumers
• Subset of Population #1
• No derogatory information
still on file as of April 2017
Population #1:
“Recession Delinquency”• ~28 million consumers
• 1+ serious (90+ dpd) delinquency
Population #3:
Total Population• All FICO® Scorable U.S.
Consumers
2009/2010
Recession era
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 21
Delinquency Aging Drives Score Increases for “Recession Delinquency” Pop
FICO® Score 8 Distribution – Recession Delinquency Population
0
10
20
30
40
50
60
70
80
90
100
300 -499
500 -519
520 -539
540 -559
560 -579
580 -599
600 -619
620 -639
640 -659
660 -679
680 -699
700 -719
720 -739
740 -759
760 -779
780 -799
800 -850
Cum
ula
tive P
erc
ent
FICO® Score 8
April 2011 April 2013 April 2015 April 2017 April 2019
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 22
Even More Substantial Score Increases for “Fully Recovered” Population
FICO® Score 8 Distribution – “Fully Recovered” Population
0
10
20
30
40
50
60
70
80
90
100
300 -499
500 -519
520 -539
540 -559
560 -579
580 -599
600 -619
620 -639
640 -659
660 -679
680 -699
700 -719
720 -739
740 -759
760 -779
780 -799
800 -850
Cum
ula
tive P
erc
ent
FICO® Score 8
April 2011 April 2013 April 2015 April 2017 April 2019
Especially between 2015 and 2017 when recession-related delinquencies were purged
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 23
Odds-to-Score Alignment Consistent Prior to the 7-year Purge Mark
Repayment Odds Across All Credit Accounts, April 2015-2017
0.1
1
10
100
1000
480 530 580 630 680 730 780
Odds (
bads
= 9
0+
dpd
over
24 m
onth
s)
FICO® Score 8 Recession Delq Total Population
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 24
Misalignment After Purge for the “Fully Recovered” Population
Repayment Odds Across All Credit Accounts, April 2017-2019
0.1
1
10
100
1000
480 530 580 630 680 730 780
Od
ds (
bad
s =
90+
dpd
ove
r 2
4 m
onth
s)
FICO® Score 8
Recession Delq Recession Delq - Fully Recovered Total Population
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 25
FICO® Score Distribution Shifts Through the Cycle:
Key Takeaways and Opportunities
Consumer credit profiles
stronger across all key
FICO® Score drivers
relative to a decade ago,
driving 20 point uptick in
avg FICO Score.
Several subpopulations
with relatively clean
credit files now are
materially riskier than
their FICO Score
cohorts:
Opportunity
• NCAP Impacted and
680+ FICO Score: ~2M
consumers
• FCRA (Recession Delq
and ‘Fully Recovered’):
~4M consumers
Through additional data
sources or profiling
analyses, identify
consumers that struggled
in past downturn
or that fit profile of those
that did, as they may
struggle again in the next
downturn.
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 26
Shifts in the Odds-to-Score Relationship Through the Cycle
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 27
620640
660
680
FICO® Scores are Designed to Rank-Order Credit Risk
* FICO® Industry Scores have a broader score range
Paid-as-agreed borrower
Delinquent borrower
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 28
Odds-To-Score Relationship Can/Does Shift Through the Cycle
550 600 650 700 750 800
Odds (
bads
= 9
0+
dpd
over
24 m
onth
s)
FICO® Score
Normal Economy Recession
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 29
Downward Shift In Odds-To-Score for Bankcard Originations Since ~2014
1.0
10.0
100.0
1000.0
550 600 650 700 750 800
Od
ds (
ba
ds
= 9
0+
dp
do
ve
r 2
4 m
on
ths)
FICO® Score 8
Odds-to-Score on New Bankcards
Oct 2007 - Oct 2009 Oct 2013 - Oct 2015
Oct 2015 - Oct 2017 Apr 2017 - Apr 2019
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 30
Downward Shift In Odds-To-Score for Auto Originations Since ~2013
1.0
10.0
100.0
1000.0
550 600 650 700 750 800
Od
ds (
ba
ds =
90
+ d
pd
ove
r 2
4 m
on
ths)
FICO® Score 8
Odds-to-Score on New Auto Loans
Oct 2007 - Oct 2009 Oct 2013 - Oct 2015Oct 2015 - Oct 2017 Apr 2017 - Apr 2019
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 31
0.1
1.0
10.0
100.0
1000.0
550 600 650 700 750 800
Od
ds (
ba
ds
= 9
0+
dp
do
ve
r 2
4 m
on
ths)
FICO® Score 8
Odds-to-Score on New Mortgages
Oct 2007 - Oct 2009 Oct 2013 - Oct 2015Oct 2015 - Oct 2017 Apr 2017 - Apr 2019
Downward Shift In Odds-To-Score for Mortgage Originations Since ~2016
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 32
• No ‘silver bullet’!
• FICO odds-to-score has shifted similarly
for key credit subsegments: thick/clean,
thin/new-to-credit/clean, and subprime
• Other theories tested, without compelling
conclusions:
• Regional drivers
• Age-based drivers
• High levels of product-specific
(e.g. student loan) debt
What is Driving the Downward Shift in Odds-to-Score ?
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 33
• Investigated differences in credit profile of consumers that
opened a bankcard in the following two originations windows:
• May 2013-July 2013
• May 2017-July 2017
• Built classification model to predict whether a given credit file
was from the 2013 or 2017 origination vintage
• Built separate models for different score bands to control for
FICO® Score:
• 595-605
• 635-645
• 675-685
• 750-770
Profiling 2013 vs. 2017 Bankcard Vintages
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 34
Notable shift towards consumers with less bankcard experience in 2017 vintage
Distribution of average months in file on bankcards as time of origination, for consumers with FICO® Score 8 = 595-605
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
% o
f B
an
kca
rd O
rig
ina
tio
ns C
on
su
me
rs
Average Months in File - Bankcard
Apr-13 Apr-17
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 35
Less Bankcard Experience Means Higher Repayment Risk
Subsequent bankcard originations bad rates, for consumers with FICO® Score 8 = 595-605
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
Ba
d R
ate
(B
ad
= 9
0+
dp
din
su
bse
qu
en
t 2
4 m
on
ths)
Average Months in File Bankcard
Apr-17
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 36
• Aimed at quantifying the prevalence of credit card debt
consolidation behavior and resultant impact on FICO® Scores
• Conducted analysis on a nationally representative,
longitudinal sample of 10+ million consumers
• Focused on consumers who consolidated debt during the
period Oct 2015 - April 2016
Credit Card Debt Consolidation Research
Background and Methodology
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 37
• No readily used/available field in the credit file to identify debt
consolidation loans
• As a result, it was necessary to define a proxy for debt
consolidator behavior
• ~0.5% of total FICO scorable population met the proxy ‘debt consolidator’ definition used for this study:
• Installment (non-auto/mortgage/student) loan opened in
six-month period between October 2015 and April 2016
• Reduction in revolving accounts with high utilization over
the same six-month period
Credit Card Debt Consolidation Research
Background and Methodology Continued
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 38
On Average, 24 Point Increase in Score Post-Debt Consolidation
Contrast to +3 Points for National Population
Average MetricDebt Consolidators Total U.S. Population
Oct-15 Apr-16 Oct-15 Apr-16
FICO® Score 8 651 676 702 704
Revolving Utilization 68% 40% 35% 34%
Credit Card Balances $9,736 $6,262 $5,744 $5,756
Highest Credit Card Utilization 104% 75% 51% 50%
Total IL Balances $28,528 $30,513 $23,353 $23,756
Total Tradeline Balances $108,920 $112,251 $87,481 $88,976
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 39
Initial Score Increase Experienced By Consolidators Regresses Some
Over Subsequent Year, Likely Driven By Re-leveraging on Credit Cards
Average MetricDebt Consolidators Total U.S. Population
Oct-15 Apr-16 Jul-16 Oct-16 Apr-17 Oct-15 Apr-16 Jul-16 Oct-16 Apr-17
FICO® Score 8 651 676 672 667 666 702 704 705 705 706
Revolving Utilization 68% 40% 45% 48% 50% 35% 34% 34% 34% 33%
Credit Card Balances
$9,736 $6,262 $7,329 $8,336 $9,295 $5,744 $5,756 $5,803 $5,931 $5,984
Highest Credit Card Utilization
104% 75% 82% 85% 86% 51% 50% 51% 51% 50%
Total IL Balances $28,528 $30,513 $31,134 $31,420 $31,445 $23,353 $23,756 $24,091 $24,352 $24,696
Total Tradeline Balances
$108,920 $112,251 $114,025 $115,145 $119,390 $87,481 $88,976 $89,328 $89,152 $92,167
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 40
Consolidator Population Gives Back Some of the Score Gains
Over Subsequent Year, Particularly in the Lower Score Range
0
10
20
30
40
50
60
70
80
90
100
300 -499
500 -519
520 -539
540 -559
560 -579
580 -599
600 -619
620 -639
640 -659
660 -679
680 -699
700 -719
720 -739
740 -759
760 -779
780 -799
800 -819
820 -840
Cum
ula
tive P
erc
ent
FICO® Score 8
Oct 2015 Apr 2016 Jul 2016 Oct 2016 Apr 2017
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 41
Debt Consolidators Riskier Relative to National PopulationMeasured on 24 Month, “All Industries/All Accounts” Outcome (bad = 90+ dpd)
1
10
100
1000
530 580 630 680 730 780
Odd
s
FICO® Score 8
National Population 'Debt Consolidators'Total Population
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 42
Coming out of Great Recession, Time to Default on Bankcards Exhibited Intuitive PatternTime to Default (in First Four Years on Books) Cleanly Rank Ordered By FICO Score
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
<6 6-8 9-11 12-14 15-17 18-20 21-23 24-26 27-29 30-32 33-35 36-38 39-41 42-44 45-47
Perc
ent
of
Defa
ults
Time To Default (in months)
Bankcard Accounts Opened May 2009-April 2010Time to Default, by FICO Score Band
[500,549] [550,599] [600,649] [650,699] [700,749] [750,799] [800,850]FICO® Score Band
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 43
Defaults on 2014-2015 Vintages Occurring Sooner After Account Opening
Particularly for those with Scores of 800+
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
<6 6-8 9-11 12-14 15-17 18-20 21-23 24-26 27-29 30-32 33-35 36-38 39-41 42-44 45-47
Perc
ent
of
De
faults
Time To Default (in months)
Bankcard Accounts Opened May 2014-April 2015Time to Default, by FICO Score Band
[500,549] [550,599] [600,649] [650,699] [700,749] [750,799] [800,850]FICO® Score Band
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 44
• Just as upward shift in score distribution over time not driven by a single factor, so too
with the downward trend in odds-to-score
• Downward shift in originations odds-to-score likely a product of a number of factors,
impacting different points along the FICO Score spectrum, including:
Odds-to-Score Shifts Through the Cycle: Key Takeaways
Low Scores
Increased underwriting
of less credit experienced
consumers
High Scores
NCAP-related deletions,
debt consolidators,
application fraud
Mid-range Scores
Purging of delinquencies
from Great Recession,
shifts to riskier product
terms, debt consolidators
300 850
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 45
Reactive: Identify and quantify degree of exposure to segments
already showing notable odds-to-score deterioration
• Refine portfolio management strategies and loss forecasting
accordingly
Proactive: Identify consumers who—controlling for
FICO® Score—are most likely to be sensitive to a downturn
• Attend Gerald Fahner and George Shand’s upcoming
session!
Odds-to-Score Shifts Through the Cycle: Opportunities in the face of a potential downturn
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 46
Learn More
Topic
Related Sessions
• Next Recession Prepping: Adjusting US FICO® Scores for
Consumer Economic Sensitivity
• Tues. Nov. 5th at 4:30 pm
• Room - Sutton Beekman
Solution Center • Scoring Strategies
Experts Here
• Gerald Fahner
• George Shand
• Dave Shellenberger
• Sharon Tilley
FICO Blog • Coming soon!
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 47© 2019 Fair Isaac Corporation. Confidential. 47
Tell us how we did!
Before you leave, please take
a couple of minutes to take our
session survey found in the
FICO World app in the session
details.
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 48
Thank You!
Ethan Dornhelm
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 49
Unsecured Installment Loan Originations – Repayment Odds Below 2006-2008 Period
1.0
10.0
100.0
450 500 550 600 650 700 750 800
Od
ds (
bads
= 9
0+
dpd
ove
r 2
4 m
onth
s)
FICO® Score 8
Odds-to-Score on New Unsecured ILs
Oct 2006 - Oct 2008 Oct 2010 - Oct 2012 Oct 2014 - Oct 2016 Oct 2016 - Oct 2018
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only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 50
Degree of Odds-to-Score Shift Can Vary Based on Factors Outside of FICO® Score
1.0
10.0
100.0
1000.0
550 570 590 610 630 650 670 690 710 730 750
Odds (
bads
= 9
0+
dpd
over
24 m
onth
s)
FICO® Auto Score 8
Odds-to-Score on New Auto Loans
Oct 2012, Terms = 36-59 months Oct 2012, Terms = 72-83 months
Oct 2016, Terms = 36-59 months Oct 2016, Terms = 72-83 months
© 2019 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient
only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 51
Similar Regression in Score Observed on Consolidator Population That Subsequently Opened a New Bankcard*
0
10
20
30
40
50
60
70
80
90
100
300 -499
500 -519
520 -539
540 -559
560 -579
580 -599
600 -619
620 -639
640 -659
660 -679
680 -699
700 -719
720 -739
740 -759
760 -779
780 -799
800 -819
820 -840
Cum
ula
tive P
erc
ent
FICO® Score 8
Oct 2015 Apr 2016 Jul 2016 Oct 2016 Apr 2017* In 3 months following consolidation