2010NationalInteragencyCommunityReinvestmentConference2010TomQuinnTomVice President Global ScoringConfidential The material in this presentation is the property of Fair Isaac Corporation is provided f ID: 881789
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1 FICOScoring Questions 2010NationalIntera
FICOScoring Questions 2010NationalInteragencyCommunityReinvestmentConference 2010 TomQuinn Tom Vice President, Global Scoring Confidential. The material in this presentation is the property of Fair Isaac Corporation, is provided for the recipient only, and shall not be used, reproduced, or disclosed without Fair Isaac Corporation's express consent.© 2010 Fair Isaac Corporation. March 2010 Sample Credit ReportThe Five Information Zones IDENTIFYING (PERSONAL) INFORMATION 1 IDENTIFYING (PERSONAL) INFORMATION I. Wishfor Credit12 Lost Lane Sams Gas & Oil805 Mai
2 n St. Somewhere, USA 66666 AttendantAnyt
n St. Somewhere, USA 66666 AttendantAnytown, America 77777 Date of Birth 1-25-56 SSN 888 88 8888PUBLIC RECORD ( LEGAL ITEMS ) 1 2 () 9-06 Judgment $1000 Satisfied 3-07 2 3 TRADE LINE (ACCOUNT) INFORMATIONIndustryDate DateHighBalance CurrentHistorical ReportedOpenedCreditRatingRatingBankcard6-083-89 , 0Current120+ 6 y rs a g o ,yg Auto loan6-087-068,0001,500CurrentRetail3-086-971,00020030 daysDateIndustryDateIndustry At fi © 2010 Fair Isaac Corporation. Confidential. - B - A u t o fi 6-15-08Oil company2-07-09Retail FICOScore Predictive Information CONSIDERED NOT CONSI
3 DERED Tradelines ment Public Records py
DERED Tradelines ment Public Records py Income © 2010 Fair Isaac Corporation. Confidential. What Drives a Consumers FICO 1. Payment History 35% 5. Credit Mix 35% Outstanding 3. CreditHistory Pursuit of New Credit 10% % Credit History Length 10% © 2010 Fair Isaac Corporation. Confidential. Loan Modification Impact on Credit Scores »The exact impact of a loan modification on a credit score depends on a number of factors: Whetherornotthelenderchoosestoreporttheloanmodification » chooses modification event to the credit reporting agency.»What infor
4 mation is reported regarding the loan mo
mation is reported regarding the loan modification. Theoverallcompositionoftheconsumer screditreport » overall consumers »When present, negative information is considered in terms of severity, frequency, and recency. »Generally speaking »The impact on score will not be as noticeable for consumers whose creditfilesalreadyincludedmissedpayments/carryheavydebt credit »Conversely, the downward impact on score will probably be more noticeable on consumer files with no other delin q uenc © 2010 Fair Isaac Corporation. Confidential. qygy items a
5 nd relatively low debt levels. The Data
nd relatively low debt levels. The Data Shows »Consumers with previous indications of not paying as agreed are more likely to demonstrate higher future risk. Mdftik(t12 thfid)fl » M easure d f u t ure r i s k ( per f ormance w i n d f or severa l population segments of interest. Population Segment Bad Rate % Segment p % 1No mortgage, clean on other accounts5.0%2No mortgage, has delinquency on other accounts42.1% 3 Hasmortgagecleanonmortgage cleanonallotheraccounts 29% 3 Has , 2 . 4Has mortgage, clean on mortgage,delinquencyon other accounts18.9%5Has mor
6 tgage, delinquencyon mortgage,delinquenc
tgage, delinquencyon mortgage,delinquency on other accounts49.6%6Has mortgage, delinquency on mortgage,clean on other accounts17.5% »Consumers with negative mortgage information experienced future bad t tht 6 t 17 tihihdtith Bad Rate = 90+ days past due on any credit obligation © 2010 Fair Isaac Corporation. Confidential. t are 6 t 17 h er compare d t o consumers w ith no negative items on file. Mortgage Loan/Mod Workout Reporting »Industry reporting guidelines (Metro 2) are created by the Includesguidelinesfordifferentprograms(MakingHomeAffordable » Includes
7 different Program, Hope for
different Program, Hope for Homeowners Program, Freddie Mac/Fannie Mae Includesguidelinesfortrialperiodposttrialperiodrenegotiatedor refinanced loans, loans in forebearance, short sale, foreclosure.»Generally speaking Adidiiiiilld » A ny account status co d e ng not pay i ng as or i g i y agree d and/or any indication of late payments in the mortgage obligations payment history profile will be considered negative by the score. » Specialcommentcodesreportedbythelendermayormaynotbe » Special considered negative by the credit
8 score. © 2010 Fair Isaac Corporation. C
score. © 2010 Fair Isaac Corporation. Confidential. Impact on Credit Score Can Vary Benecia. Note that their initial FICO scores are 100 points apart.First, let's give you a general snapshot of Alex's and Benecia's credit profiles: »Lets compare potential score impact for two consumer scenarios: Score of 680Mar y has a FICO and: Has six credit accounts,including several active credit cards, an active auto loan, a mortgage, dtdtl Has ten credit accounts, including several active credit cards, an active autoloan, a mortgage, dtdtl an a s t u d l oanan a s t u d l An
9 eight-year credithistoryA fifteen-yearc
eight-year credithistoryA fifteen-yearcredit history Moderate utilization on his credit card accounts (his balances are 40-50%of his limits)Low utilizationon her credit card accounts(her balances are 15-25% of her limits) Tworeporteddelinquencies:a90 - Two a delinquency two years ago on a credit card account, and an isolated 30-day delinquency on his auto loan a year agoNeverhas missed a payment on any credit © 2010 Fair Isaac Corporation. Confidential. Has no accounts in collections and no adverse public records on fileHas no adverse public records on file Impac
10 t on Credit Score Can Vary »What happen
t on Credit Score Can Vary »What happens to score if one of the following scenarios takes place and is reported according to CDIA reporting guidelines? John (680)Mary (780)530-550540-560 Flttd osure on mor t gage repor t e d - - Short Sale on mortgage reported600-620650-670 New 30 - lateonmortgageisreported - - Enters Loan Mod Trial Period*580-600620-640Enters Loan Mod Trial Period**no changeno change no changeno changeMort Loan in Forebearance**no changeno change © 2010 Fair Isaac Corporation. Confidential. Refinance (prevtrade closed/new trade posted)minor
11 changeminorchange* Any comment code repo
changeminorchange* Any comment code reported is considered negative.** Any comment code that is reported is not considered negative. Scores can Rebound Back »Delinquency and derogatory related items required to be purged »As delinquency and derogatory information ages on the credit report, less points are lost for recencyrelated characteristics »Demonstration of other sound credit behaviors will help the score»Keep balances low » Makepaymentsontime » Make »Only apply for credit when needed © 2010 Fair Isaac Corporation. Confidential. FICOScore Resources »Wea
12 lth of credit scoring information at »C
lth of credit scoring information at »Consumer can also obtain their FICO score, ex p lanation and p underlying credit report to understand their specific credit OtherFICOcrediteducationalbrochuresandlearningaids educational available as well © 2010 Fair Isaac Corporation. Confidential. THANK YOU tomquinn@fico.com Confidential. The material in this presentation is the property of Fair Isaac Corporation, is provided for the recipient only, and shall not be used, reproduced, or disclosed without Fair Isaac Corporation's express consent.© 2010 Fair Isaac Corp