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12th June 2018
FICO and Equifax launch solution to help lenders meet affordability requirements
At the Money20/20 Europe conference in Amsterdam, analytic software firm FICO and information solutions firm Equifax launched the FICO® Risk and Affordability Decision Suite, powered by Equifax®, which uses advanced predictive analytics to assess a consumer's repayment risk as well as their ability to handle both existing and new credit.
The FICO Risk and Affordability Decision Suite is designed for lenders who need to decide which customers can handle additional or existing credit obligations. Unlike heuristic solutions based on income and its presumed link to affordability, this RegTech solution is based on thorough research into risk and affordability factors and their relationship to consumers' payment patterns. While initially available for cards, the solution is designed to address credit and affordability risk across all credit portfolios.
Steve Hadaway, general manager for FICO in Europe, the Middle East and Africa, said: "For lenders in the UK, basing credit decisions on credit risk alone is no longer enough. Lenders need to consider affordability along with creditworthiness, while ensuring they make fair, equitable decisions based on the most accurate data available. Through our partnership with Equifax, we're giving lenders a systematic and sound way to lend responsibly."
Because the suite is designed for easy use in decision engines, lenders can start getting value from it swiftly, and with minimum reliance on internal IT departments. All of the solution's decision keys are designed for ease of integration and deployment in FICO® TRIAD® Customer Manager, which is used to manage most UK card accounts.
The information it delivers can be used in TRIAD decision strategies for credit line increases and decreases, and other account management decisions. Lenders can drive profitable growth by safely increasing the credit limits for cardholders who have the capacity to handle additional credit.
Neil Cunningham, Partnerships Director at Equifax UK, said: "The Consumer Credit sourcebook issued by the FCA includes detailed obligations for lenders to avoid over-burdening consumers with debt, and the FCA recently issued new rules with the same goal. We have designed the Risk and Affordability Decision Suite to be used by lenders to help meet the evolving regulatory landscape. Lenders may have struggled in the past to embed affordability considerations into their decision systems – but now we've made that easy."