FICO and TransUnion Unite to Enhance Credit Access in Kenya

FICO and TransUnion Kenya have formed a partnership to enhance credit access through advanced data analytics. They will utilize the CreditVision Variables solution with the FICO Score, improving risk assessment and financial inclusion. The integration aims to enhance predictability in lending, with previous successes noted in other global markets. FICO also plans to incorporate BNPL data into its scoring analysis to benefit more consumers.

FICO and TransUnion Kenya have established a partnership aimed at enhancing credit access in Kenya. This collaboration utilizes advanced data and analytics, enabling lenders to make more informed decisions that promote economic empowerment and strengthen the financial ecosystem. The companies announced this initiative through a news release on February 18.

The partnership merges two key tools: TransUnion’s CreditVision Variables solution and the FICO Score. This integration seeks to address challenges in risk assessment and improve financial inclusion. CreditVision Variables analyzes over 145 data sources and two years of historical payment data, while the FICO Score is tailored for the Kenyan market using proprietary analytics and data from TransUnion’s database that encompasses over 4 million records.

According to the release, enhancing traditional credit risk strategies with these tools can bolster risk predictability, enabling lenders to offer financial services to a wider range of consumers. In other regions, lenders using CreditVision Variables have noted a 20% to 30% increase in risk predictability, leading to improved approval rates of 15% to 20%.

FICO recently announced plans to include buy now, pay later (BNPL) data in its credit scoring analysis. A study conducted with BNPL provider Affirm highlighted how this inclusion could positively influence FICO Scores for certain new BNPL borrowers. Understanding BNPL data’s role in FICO Scores is essential given its rising prominence.

Ethan Dornhelm, FICO’s vice president of scores and predictive analytics, emphasized the importance of capturing the benefits of BNPL data for stakeholders in the credit ecosystem. Their research indicates that over 85% of consumers with new BNPL accounts display consistent effects on their FICO Scores. Results suggested a varied impact on score predictiveness, from minor improvements to negligible adverse effects, across numerous use cases.

The collaboration between FICO and TransUnion Kenya represents a significant advancement in improving credit access in Kenya. By utilizing innovative tools like CreditVision Variables and the FICO Score, lenders are better equipped to assess risk and extend financial services to a larger segment of the population. Additionally, the inclusion of BNPL data in credit scoring highlights the evolving landscape of financial products and their integration into credit assessments.

Original Source: www.pymnts.com