Introducing FICO? Scores for India Expanding Financial Inclusion by Scoring Millions More Consumers Lenders have the opportunity to extend credit acce

Lenders have the opportunity to extend credit access to millions of Indian consumers who otherwise cannot be scored responsibly, due to insufficient data in traditional credit bureau files.

A new dual score service from FICO, the leader in credit risk scoring and analytics, can bolster financial inclusion initiatives and help grow loan portfolios. The dual score service comprises the FICO? Score for India, based on credit data from any of the major credit bureaus in India, and FICO? Score X Data India — developed in partnership with LenddoTM. The FICO? Score X Data leverages alternative data sources to give lenders a second opportunity to assess otherwise unscorable consumers.

The FICO? Score X Data in partnership with Lenddo delivers a consistent predictive risk score using alternative data obtained by Lenddo with the consumer’s authorization. The risk score is calculated using characteristics from consumers’ digital (web and mobile) footprints along with relevant information from the lender. This provides insight into additional dimensions of credit risk for use in lending decisions as an alternative or supplement to credit bureau data.

The score has a range of 1–299, and like the bureau file-based FICO? Score, the FICO? Score X Data is scaled so that higher scores indicate better (lower) credit risk.

The FICO? Score for India and FICO? Score X Data provide additional operational efficiencies when used in concert to develop dual score strategies. A matrix can be used to set cutoff scores that consider both measures of the applicant’s credit risk, as shown in the example above. The dual-scoring matrix provides the credit manager with a tool to increase approval rates and/or decrease bad rates by using the FICO? Score X Data to refine the decision recommended based upon the FICO? Score cutoff.

Applicants who fall short of the FICO? Score cutoff by a narrow margin can be approved if they have acceptable FICO? Score X Data. These applicants are “swapped in” to increase the approval rate. Conversely, applicants who pass the bureau score cutoff, but are indicated high risk as assessed by the FICO? Score X Data, can be declined (or “swapped out”) to decrease portfolio bad rates. The process of identifying the “swap set” results in a stair-step cutoff that compensates for risk according to the combination of the FICO? Score X Data and FICO? Score for India.

The case study above reflects a loan origination portfolio.

The FICO? Score was calculated retrospectively from the credit bureau reports as of the time of application. The historical strategy was to observe the marginal bad rate of 4.9% for this portfolio. Designing a dual score strategy that incorporated FICO? Score X Data to approve any cell where the bad rate was less than 4.9%, and would decline any cell where the bad rate was greater than 4.9%, would have resulted in a reduced overall bad rate of 2.9%, and an increased acceptance rate of 57.5%. Portfolio growth and reduced risk are simultaneously achieved.

https://www.fico.com/en/latest-thinking/product-sheet/fico-scores-for-india

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