FICO launches FICO Score 4 Suite to expand financial inclusion in Mexico

By Edlyn Cardoza

FICO, a global leader in analytics, recently announced the launch of FICO® Score 4 and FICO® Extended Score 4 in Mexico.

The new scoring models are specifically designed to seamlessly incorporate the entire credit file, making it ideal for Mexico’s large and dynamic population.

In partnership with Círculo de Crédito in Mexico, FICO has redeveloped the FICO® Score using sophisticated machine learning techniques to extract trends in recent consumer data to help credit grantors in Mexico predict consumer credit risk. The product is now available.

The FICO® Score first arrived in Mexico by Círculo de Crédito in 2014. To date, Círculo de Crédito has generated more than 200 million FICO® Scores, including nearly 30 million FICO® Extended Scores, which are used by banks, FinTech, insurance companies and other credit grantors to make credit decisions, including credit cards, auto loans, personal loans, and mortgages.

The regional expansion of Círculo de Crédito has contributed to FICO’s FICO Score reshaping by leveraging data from top challengers alongside traditional financial institutions.

This new version improves previous scores, as the innovative analytical methodologies used by FICO aim to deliver strong performance, better financial inclusion, an empirically derived score, and better customer segmentation capabilities.

With increased predictive power, FICO® Score 4, based on data from Círculo de Crédito, improves the assessment of a borrower’s probability of default by providing a numerical snapshot of a consumer’s credit risk.

The Score analyses the available information on the profile of the credit information society and produces a score in the range of 300-850 that is indicative of future credit risk. This accurate risk prediction is applied to decisions in financial industries, customer segments, credit products, and lifecycle phases, from origination to collection.

FICO® Extended Score 4 is based on fundamental data from the credit information society but incorporates expanded data sources exclusive to Círculo de Crédito, allowing more consumers to qualify and expand access to credit.

“In partnership with Círculo de Crédito, we are proud to bring to Mexico the industry-leading reliability and predictive power of the new FICO® Score 4 Suite to expand access to credit in the region,” said Pablo Morales, Director of Global Partners Latin America. & Alliances at FICO.

“This is the culmination of ongoing work with our partners to innovate using the latest and most robust data science and sophisticated AI and machine learning model development techniques. Our new models expand financial inclusion by an additional 8 million qualifying consumers in Mexico by leveraging new consumer credit information.”

“Our goal at Círculo de Crédito is to generate credit conditions that promote financial well-being and trust between consumers and industry, building better relationships between credit providers and their beneficiaries and helping companies and individuals understand the information that will allow them to meet their economic and financial objectives,” said Juan Manuel Ruiz Palmieri, general director of Círculo de Crédito.

“Through our partnership with FICO, FICO® Score 4 Suite has developed and tested using our latest data to address issues specific to regional lending practices, current consumer behaviors, and the current credit environment to drive a responsible credit culture in the marketplace.”

FICO® Score 4 and FICO® Extended Score 4 will help leaders identify growth opportunities in their customer base, accurately manage organisational risk tolerance, increase profitability and reduce losses by incorporating available Credit Circle insights to influence credit risk decisions.

International credit grantors have relied on FICO® scores to balance credit risk, portfolio growth and consumer experience since 1997. By leveraging alternative data sources, FICO® scores can help expand access to credit to consumers worldwide. Research by a large Mexican grantor modelled with FICO® Score 4 showed the potential to increase profits by up to 86% by reducing delinquency by up to 13% while maintaining current acceptance rates.