Much has been written about the death of the FICO credit score. See Wall Street Journal’s “Silicon Valley: We Don’t Trust FICO Scores” and American Banker’s “Will Fintechs Kill the FICO Score?” for recent (Summer 2016) articles. The narrative invariably revolves around how the score is backward looking…considers limited individual past behavior…and can occasionally misfire …
Who’s a better credit risk for a $15K loan? A person making $80K a year or a person making $35K? Most of us would prefer the $80K person – makes enough to cover the interest payments … probably facing unanticipated expenses … wedding? … medical? But wait! What if that 35K person worked in a …
By including information concerning the economic vitality of a borrower’s locality as a decisioning criteria, investors can improve the performance of their Lending Club loan portfolio. Overlaying local economic vitality data provides additional insights about borrower creditworthiness that is not captured by traditional credit scoring models. Our framework blends this additional information into an expected …
