The FICO score has a long and well-established history as a key metric in the determination of credit-worthiness. The FICO score has the power to influence whether a person can experience significant life events, like the purchase of their first car or home. Currently, it’s a major factor in credit union loan analytics.
However, as we rapidly enter the age of Big Data and loan analytics, does the FICO score utilize enough information to make an accurate determination of a borrower’s ability to pay? The wealth of data available to credit unions should augment their loan analytics.
A New Age of Loan Analytics
As I consider the future of credit unions, I believe the industry’s position on the significance of the FICO score in their underwriting process is an important issue. Is FICO a major determining factor, or is it merely one of many data points that can be used to predict probability of default for a given loan?
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