TransUnion’s FICO Score 6 and FICO aim to expand access to credit in South Africa

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JOHANNESBURG–(BUSINESS WIRE)–FICO, a global leader in analytics, today announced the release of FICO® Score 6 with longtime partner TransUnion Africa. FICO® Score 6 is designed to be one of the most powerful and predictive scores to date in the South African market and is available through TransUnion. Previous versions, known as the Empirica Score, have been in South Africa for 25 years and have guided over 3.5 billion credit decisions to date.

FICO® Score 6 improves a borrower’s credit risk assessment over previous versions by providing a stronger predictor of the likelihood of a consumer defaulting, and expands the modeling approach with features and additional information.

The score was developed using the latest data from TransUnion, making it ideal for South Africa’s large and dynamic population. It features a familiar range of 300 to 850, with higher scores indicating lower credit risk. Based on the score, lenders can make more informed decisions about borrowers across customer segments, credit products, and lifecycle phases from account creation to account management. FICO® scores are trusted by lenders around the world to balance credit risk, portfolio growth and customer experience.

The FICO® Score 6 score was found to be up to 24% more predictive than previous versions when compared to the “all industries” level, with further improvements seen in specific industries. By updating this score, lenders can build healthier portfolios based on the latest consumer credit data and trends. Additionally, FICO® Score 6 supports lenders’ efforts to lend to more consumers who were previously unscored. Research shows that, powered by data from TransUnion, the FICO® Score 6 can score a greater proportion of the South African adult population using its Expansion Risk Indicator (ERI).

FICO and TransUnion have worked together for more than two decades to give credit providers in South Africa and key neighboring countries credit risk scores that enable greater performance accuracy while supporting a consistent customer experience. FICO and TransUnion capitalized on the synergies of the former’s deep experience in credit risk analysis and the latter’s significant credit bureau analytical capabilities. The relationship between the two companies continues to produce valuable solutions for the South African market.

Increase access to credit

“The Financial Inclusion Study recently released by TransUnion showed that over 20 million South African consumers were unserved with credit and an additional 7 million underserved i.e. active credit but with limited participation, at the end of March 2022,” said Lee Naik, CEO of TransUnion Africa. . “Our data shows that only 16% of these underserved consumers migrate to credit served every two years, despite our analysis showing that these consumers are performing as well as, if not better than, the credit served consumer community. With improved predictability and granularity, FICO® 6 can play an important role in bringing these low-participation consumers into the formal economy. Additionally, the FICO® Score 6 can help lenders provide consumers with the opportunity to secure the financing they need to weather any pandemic-related setbacks, or even enter the mainstream for the first time. economy.

FICO® Score 6 achieves this through an Expansion Risk Indicator (ERI) that assesses individuals who do not have enough credit history to calculate a standard FICO® score, furthering financial inclusion. The ERI captures additional insights from extended/alternative TransUnion data and provides eight indices to differentiate credit risk, allowing lenders to make more informed decisions for consumers. For people currently invisible to credit, the new ERI model will allow lenders to score twice as many applicants as the model it replaces. This enhanced ERI is only available in FICO® Score 6 and is calculated only when a standard FICO® score cannot be determined during the credit application process, allowing lenders to make more effective choices for consumers. with thin credit records or no credit history.

“Together, FICO and TransUnion are committed to providing solutions designed to enable financial inclusion and create opportunity for consumers who previously would not have access to the credit they might deserve, due to a lack of established credit history,” Naik said.

Explainable credit decisions

Reason codes and stories are a standard feature of Empirica, providing insight into why a consumer did not receive the maximum score. FICO® Score 6 retains previous reason codes, but enhances information for lenders with four additional reason codes. Positive reason codes are only available in FICO® Score 6.

“The FICO® Score 6 is a game-changer for understanding credit,” said Michelle Beetar, vice president, Africa and Middle East at FICO. “By adding positive reason codes, we can give lenders more insight into how a borrower manages credit, and this can be used to personalize engagement, sales, and credit education.

“We developed and tested the FICO® Score 6 to ensure strong performance under normal economic circumstances and during a time of evolving economic challenge, such as the COVID-19 pandemic. This way, the score is better equipped to respond to changing market conditions.

FICO® Score 6, based on data from TransUnion (South Africa), is available from TransUnion for South Africa, Namibia, Botswana and Eswatini. For more information on how organizations can benefit from FICO® Score 6, visit: FICO® Score 6 | Trans Union South Africa

About TransUnion (South Africa)

TransUnion is a leading global information and knowledge company that enables confidence in the modern economy. We do this by providing an actionable picture of each person so they can be reliably represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this information for goodSM. TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people in more than 30 countries. Recognized as a leader in the African credit, risk and fraud markets, TransUnion provides consumer reporting, risk scoring, analytical services and decision-making capabilities to businesses across the continent. TransUnion is the only IT company in Africa that manages multiple complex databases containing insurance, cellular, consumer, commercial and automotive data assets. In addition, we manage leading African databases of property and deeds, qualifications and telecommunications. Learn more at https://www.transunion.co.za/

About FICO

FICO (NYSE: FICO) powers the decisions that help people and businesses around the world thrive. Founded in 1956, the company pioneers the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 U.S. and foreign patents on technologies that increase profitability, customer satisfaction and business growth in financial services, telecommunications, healthcare, retail and many other industries. With FICO solutions, businesses in more than 120 countries are doing everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of planes and rental cars are in the right place at the right time. Learn more at http://www.fico.com.

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FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.

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