FICO pilot holds promise for auto financing

The results of a pilot program between Fair Isaac Corp. and 12 big credit-card companies could ultimately help dealerships get auto loans approved for so-called thin files -- that is, customers with little or no credit history.

Fair Isaac, better known as FICO, is testing credit scores generated by “non-traditional” payment histories, such as paying cellphone and utility bills, which historically didn’t show up in credit scores.

FICO says the new credit scores, using data from LexisNexis and Equifax, could potentially provide credit scores for 15 million thin files.

Jeff Scott, a spokesman for FICO, told Automotive News the new scores could provide an “on ramp” to credit. The potential benefits to auto lenders and dealerships are probably down the road, he said.

“People who don’t have standard FICO Scores may be able to receive a score based on the alternative data,” he wrote in an email. “This can help people gain access to credit products, such as credit cards. After a person has a credit card, they are likely to get a traditional FICO Score within six months.”

FICO, of San Jose, Calif., expects to make the new credit scores available to more lenders later this year.

VantageScore Solutions of Stamford, Conn., a FICO rival, is also working on assigning credit scores to thin files.

Analysts say lenders are eager to solve the problem of thin files because of the growing purchasing power of millennials, consumers born in the 1980s and ’90s. Many millennials haven’t established credit yet through the purchase of a home or auto, but most of them likely have a cellphone.

You can reach Jim Henry at

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