FICO Score Stats

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Permalink Reply by Gary Rademaker on July 13, 2010 at 9:50am

Jim - many foreclosures are still on the horizon, and with little improvement in unemployment, other consumer credit will default or pay late. This downward trend in CB scores could continue, but may not paint the most accurate picture of the true character of the consumer. Do you foresee any change in lenders' evaluation of credit scores in the near future - specifically, is there any chance that lenders will dig deeper into a persons credit history to identify "situational" defaults and late payments vs. the consumer that opted for the "strategic" foreclosure? Those who strategically default should be denied credit, however the "situational" defaults may still be of good character.

Permalink Reply by Jim Coburn on July 13, 2010 at 10:25am

Like I suggested, improvement will not be "fast".

As you mention Gary, the new score segments do not paint a completely accurate picture regarding some consumer's character and their inability to cure due to the economic crisis. The 25% stat is "cause for pause" and helpful data to those in marine retail and finance. However, bear in mind that many consumers did have control and chose a darker route.

The flip side of this is the over 800 score population is reported to have increased a little bit. What we were seeing in the past couple of years were the mid/average scores taking an approval hit because of the "crunch."

Good lenders will indeed review scores and consumer's situations very carefully. Non-engaged lenders will continue to use score as their key decision method which unfortunately will result in a) no business or b) flawed business. The best consumer installment portfolios today are at institutions who embrace, practice and remain true to the judgemental lending philosophy (with appropriate skills in debt ratio and collateral analysis....).

So yes, I am hearing of some lenders moving toward improved credit review regarding "situations". The movement in this direction is still slower than we would like in part because of the "crunch", capital needs and lingering uncertainty regarding legislation and finance regulation.