FICO and TransUnion have partnered to enhance credit access in Kenya by leveraging advanced data analytics and credit scoring tools. Their collaboration introduces the CreditVision Variables solution and FICO Score, aimed at improving risk assessment and financial inclusion. This initiative is expected to enhance risk predictability and increase approval rates for lenders, demonstrating the importance of incorporating new data types like BNPL into credit scoring.
FICO and TransUnion have joined forces to enhance credit accessibility in Kenya. According to their recent announcement, this collaboration will enable lenders to utilize enriched data and analytics for improved decision-making, thereby fostering economic empowerment and a robust financial ecosystem. This partnership introduces two key tools: TransUnion’s CreditVision Variables solution and FICO Score to address issues in risk assessment and financial inclusion.
The CreditVision Variables solution provides a comprehensive overview of consumer financial behavior, incorporating over 145 data sources and two years of historical payment data. Meanwhile, the newly developed FICO Score has been tailored specifically for the Kenyan market, utilizing proprietary predictive analytics and over four million records from TransUnion’s database.
The integration of the FICO Score along with extensive data analysis aims to enhance traditional credit risk strategies, thereby improving risk predictions. This, in turn, allows lenders to extend their services to a broader consumer base. Globally, those adopting CreditVision Variables in their credit risk evaluations have witnessed a 20% to 30% increase in risk predictability, leading to approval rate improvements between 15% and 20%.
Earlier this month, FICO announced plans to incorporate buy now, pay later (BNPL) data into its credit score evaluations. Collaborating with BNPL provider Affirm, FICO explored how this payment method, when simulated within their scoring framework, could positively affect FICO Scores for new BNPL users. Ethan Dornhelm, FICO’s vice president of scores and predictive analytics, emphasized the importance of effectively reflecting the benefits of BNPL data on credit scores for all involved in the credit ecosystem.
The study revealed that over 85% of consumers who had established new BNPL accounts saw a consistent impact on their FICO Scores, with results varying from modest improvements to no adverse effects across various scenarios. This insight underscores the potential of BNPL data to enhance FICO Score performance while reducing risk for lenders.
The collaboration between FICO and TransUnion represents a significant advancement in improving credit access in Kenya. By leveraging comprehensive data and predictive analytics, lenders can enhance decision-making and foster financial inclusion. The integration of BNPL data into credit scoring further illustrates the dynamic nature of credit assessment and its potential to positively influence consumer creditworthiness.
Original Source: www.pymnts.com
