FICO announced that the auto industry is simultaneously migrating to the FICO 8 Auto Score, with most lenders expected to complete the adoption process by May.
A number of auto lenders have already migrated to the FICO 8 Auto Score, including Volkswagen Credit, Santander Consumer USA and First Investors, with a majority of the top 35 lenders planning to migrate within the next two months, according to FICO.
In addition, the nearly 18,000 franchised dealers and the majority of the more than 30,000 independent dealers using credit scores in the industry are also expected to migrate to remain in synchronization with their lender partners, reported F&I and Showroom.
The industry-wide migration to the new FICO 8 Auto Score will allow lenders and dealers to jointly share more consistent information as they finance vehicle sales and extend credit to their customers with greater confidence. Rating agencies and the general financial services community also use FICO Scores for their analyses of the auto industry.
“FICO seeks to help lenders position themselves for growth while controlling risk in their portfolios,” said Dr. Mark Greene, CEO of FICO. “Moreover, FICO knows well that the credit quality of the automotive consumer has changed over the last couple years. While there is cautious optimism around growth opportunities for the auto market in 2011, FICO realizes that sharper risk prediction tools are critical to our clients’ long-term profitable growth.”
The FICO 8 Auto Score is currently being used by more than 3,500 banks and finance institutions across multiple lending lines such as bankcard and mortgage.
“To minimize risk and increase profits, lenders need updated credit scores that incorporate the latest data and analytics for credit risk assessment,” said Craig Focardi, senior research director at TowerGroup. “Updated credit scoring analytics enable lenders to upgrade their loan underwriting and account management practices, which has a direct impact on the bottom line.”
