Auto Credit Express Blog
March 14, 2008
New FICO score means more subprime customers
Fair Isaac, the company that created the FICO score, has created a new scoring model that will create credit histories for more customers…
Why FICO created the Expansion Score
According to research done by Fair Isaac, almost one-fourth of all adults in the U.S. either don’t have a credit report, or have a credit report that contains too little information on which to compute a credit score. The reason behind this, they go on to state, is because the credit bureaus add new information on a customer only when it is submitted to them by creditors and businesses. Since this process is voluntary, many transactions go unreported.
What sources will FICO get this information from?
Fair Isaac has created two new subsidiaries. The first will collect information from non-traditional sources such as payday lenders, rent-to-own stores and pawn shops. It will also seek out new sources to provide additional data for the network. The second company will then assemble the information into credit files so that it can be analyzed and translated into the same credit score range as a traditional FICO score.
What does this mean to your subprime department?
It means that many customers who got turned down with your subprime lenders because of limited or no credit history will now have a credit file, or a more complete credit file, along with a credit score. Those customers that Fair Isaac believe will be the most impacted by the new model include young people, immigrants, people that have operated on a “cash†basis, as well as consumers that have recently been widowed or divorced.
The Bottom Line
The new scoring model should help you qualify more customers for subprime than in the past. According to Fair Isaac, the new program could add an additional 50 million consumers to their database.
Looking at the overall program, the new FICO Expansion Score should have its greatest impact in your subprime department. Here at Auto Credit Express, we can help you prepare for this new business with our total solution to your subprime needs. Whether its our cutting-edge software or the best subprime leads on the planet, we’re here to help you make your subprime department more efficient and more profitable. For more information, call us at 888.535.2277 or fill out our contact form and we’ll have a representative get in touch with you to personally show you why our products are used by over 500 dealers in the United States and Canada.
