TransUnion, FICO launch scoring model that better reflects car buyers' credit histories

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Photo credit: DAVID PHILLIPS

TransUnion and FICO have teamed to provide auto lenders and dealers with an industry-specific credit score based on borrowers’ historical, or trended, data to more accurately and efficiently communicate a borrower’s risk.

The credit bureau and credit scoring agency announced the creation of FICO Auto Score 9 XT last week. Like FICO Auto Score 9, it caters to the auto industry. The difference between the scoring methods lies in data. Auto Score 9 XT uses TransUnion’s CreditVision trended data.

Unlike a traditional credit report, which is a snapshot, CreditVision data show not only “what your balance is today but how your balances have looked for the past 30 months and how you manage your credit seasonally,” Jason Laky, senior vice president and automotive and consumer lending business leader for TransUnion, told Automotive News.

The 30 months of historical information includes payment history, such as dollars paid vs. minimum payment due and total amount borrowed over time.

“Many consumers pay substantially more than the minimum payment,” Laky said. “That information helps lenders identify consumers that are less of a credit risk than they would be if they have an assumption that minimum payments are being made.”

The new score gives dealers an opportunity, too, said Sally Taylor-Shoff, scores vice president at FICO; it broadens and strengthens their customer base.

“It is the most powerful score out there for auto lending. [Dealers are] going to have more people and give them better loans or a better price,” she told Automotive News. They will “sell a little more car or sell more frequently because more people” will qualify.

The new score also disregards collection agency accounts that have been paid off and differentiates unpaid medical accounts that have gone into collections from unpaid nonmedical accounts that have gone into collections.

Demand for data

FICO is eager to work with trended data, Taylor-Shoff said.

“This is an area where there was some demand for leveraging this information. In general, we are very open to adding or supporting scores that go beyond the traditional data whether it’s FICO Auto XT or another product,” she said. FICO “supports the overall practice of looking at newer types of data available and putting them to use where they make sense.”

National credit reseller ProMax Unlimited will also make FICO Auto Score 9 XT available to dealers and lenders.

“It’s very important for a dealer community to know that the major resellers are embracing Auto Score 9 XT,” Laky said. “The mechanism by which auto dealers get their reports are making the score available.”

CreditVision and FICO scores individually provide helpful data points to lenders and dealers, but they aren’t typically comparable. They have different objectives, Laky said. “Auto Score 9 XT solves that problem.”

“FICO is the de facto score the auto finance community uses to communicate that risk,” he said. “Now it communicates trended data.”

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TransUnion, FICO launch scoring model that better reflects car buyers' credit histories