in ,

FICO Score’s Hold on the Credit Market Is Slipping

fico-score’s-hold-on-the-credit-market-is-slipping

For decades, nearly every consumer credit decision revolved around a three-digit number—the FICO credit score. That is changing.

FICO has long dominated the market for consumer credit, providing scores for some 200 million U.S. consumers that are used by a whole host of lenders to evaluate credit-card, auto-loan and mortgage applicants. For borrowers, higher scores can mean bigger loans and lower interest rates.

But powerful forces are aligning to challenge its dominance.

Big lenders are moving away from FICO, according to people familiar with the matter. Capital One Financial Corp . and Synchrony Financial don’t use its scores for most consumer-lending decisions. They are becoming a smaller factor in some underwriting decisions at JPMorgan Chase & Co. and Bank of America Corp.

A key financial regulator, meanwhile, is encouraging banks to de-emphasize credit scores in an effort to expand access to affordable credit. And housing-finance giants Fannie Mae and Freddie Mac are considering allowing lenders to use other scores when evaluating mortgage applicants.

What do you think?

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Loading…

0
volvo-cars-needs-investors-to-value-brain-over-brawn

Volvo Cars Needs Investors to Value Brain Over Brawn

see-inside-victoria’s-secret’s-revamped-‘store-of-the-future’-as-it-ditches-angels-to-lure-more-women

See inside Victoria’s Secret’s revamped ‘store of the future’ as it ditches Angels to lure more women