New consumer credit score ranking program available to lenders
When it comes to consumer credit scores, creditors now have an additional way for rating risk.
Developed by FICO with data from Equifax, the Credit Capacity Index ranks consumers based upon the amount of debt they may be able to take on in the future.
Robert Duque-Ribeiro, vice president and general manager of scoring for FICO, said that the credit crisis has made getting more information on credit risk an important goal of lenders.
“Credit Capacity Index offers lenders an unprecedented, extra dimension when used in combination with FICO scores,” Duque-Ribeiro said. “We believe it will be particularly valuable to lenders for improving control over loss exposure and reserves and increasing profitability during today’s uncertain economic times.”
The Credit Capacity Index can be used with BEACON credit scores, which rate a consumer’s repayment risk based on their credit profile. By combining the two, lenders and creditors can separate consumers who may have the same repayment risk but different capacities for future debt.
While lenders continue to try and find more accurate ways to predict risk, consumers also are turning more to other avenues when it comes to their debt problems and budgeting. A recent poll from Pew Internet shows that 88 percent of internet users have used the web while researching their current financial situation.