For decades, almost every consumer credit decision revolved around a three-digit number (FICO credit score). It’s changing.
FICO has long dominated the consumer credit market, scoring about 200 million US consumers used by many lenders to evaluate credit card, car loan and mortgage applicants. It offers. For the borrower, the higher the score, the larger the loan and the lower the interest rate.
But powerful forces are lined up to challenge its domination.
Major lenders are moving away from FICO, according to people familiar with the matter. Capital One Financial Corporation. Synchrony Financial does not use that score in most consumer lending decisions. These are becoming smaller factors in some underwriting decisions at JPMorgan Chase and Company and Bank of America Corporation.
Meanwhile, major financial regulators are encouraging banks to avoid focusing on credit scores. Efforts to increase access For affordable credit. Mortgage giants Fannie Mae and Freddie Mac are also considering allowing lenders to use other scores when assessing mortgage applicants.
FICO score hold on credit market is declining
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