On Thursday, FICO, LexisNexis Risk Solutions and Equifax described details of a pilot program currently underway that could eventually enhance the underwriting and origination endeavors of auto finance companies.

Officials highlighted the pilot program allows 12 of the largest credit card issuers in the U.S. to use alternative data to identify creditworthy individuals who would otherwise be unlikely to obtain traditional credit.

FICO is planning to complete the pilot program in the coming months, and expects to make the score based on alternative credit data available to more finance companies later this year.

Based on extensive research, FICO's data scientists found that alternative data such as property records, telecommunications and utility information can reliably be used to score 15 million consumers who do not have enough credit data to generate FICO scores.

By using alternative data from LexisNexis and Equifax, FICO will give card issuers a FICO Score that complies with relevant regulations that they can use to extend credit responsibly to millions of additional people. 

“Working with Equifax and LexisNexis, we set out to help unbanked, under-banked and disadvantaged people gain equal access to the standard credit products enjoyed by millions of Americans,” said Jim Wehmann, FICO's executive vice president for scores.

“We’re excited by our pilot program's strong results thus far,” Wehmann continued. “FICO’s focus is on expanding access to credit; not simply scoring more people. Our approach also addresses a paradox for people seeking their first traditional credit product – you often need a credit history before you can get traditional credit.”

Wehmann explained the data used in FICO’s pilot program includes telecommunications and utility bills from Equifax as well as property and public records from LexisNexis.  He added this new FICO score is engineered to work alongside existing FICO scores.

The providers went on to mention that card issuers will be able to use the alternative score without having to “rip and replace” existing systems, significantly lowering the cost and accelerating time to market.  

“Card issuers are seeking opportunities to safely expand access to credit based on new data sources that are reliable, compliant and predictive and we have received an incredible response to this pilot program," said Rick Trainor, chief executive officer of business services at LexisNexis Risk Solutions.

“LexisNexis data, which the financial services industry has trusted for more than 40 years, provides additional insights about creditworthiness that can help bring millions of consumers into the financial mainstream,” Trainor continued.

Joy Wilder Lybeer, senior vice president of enterprise alliances at Equifax, pointed out how consumers’ activities shown in this new data can help credit card companies, and perhaps down the line auto finance companies, as well.

“The best-in-class telecommunications and utility data available only from Equifax shows that unbanked consumers who, for example, make regular, on-time payments to wireless carriers, may be creditworthy and reliable customers,” Wilder Lybeer said.

“We want to help card issuers identify as many additional creditworthy people as possible, so as to work toward a more financially inclusive and responsible borrowing environment,” she went on to say.

Firms that re interested in learning more about FICO's work with alternative data may contact FICO at FICOScoreInfo@FICO.com.