Latest news with #creditworthiness
Yahoo
2 days ago
- Business
- Yahoo
FICO To Roll Out New Scores to Reflect Your "Buy Now, Pay Later" Habits, Impacting Millions of Americans' Credit
"Buy now, pay later"users may hurt their credit if they don't pay back those loans on time. Credit score overseer Fair Isaac (NASDAQ:FICO) announced new scoring models last month that will evaluate BNPL usage when determining credit worthiness. The program, scheduled to roll out this fall may help some folks gain access to better loan terms but failing to pay on time is going to hurt. The processing services let retailers provide installment loans at the point of sale so buyers can spread out payments. The loans may have no interest or service fees, potentially encouraging customers to overspend. Not surprisingly, a Bankrate survey released in May showed that about 'half of buy now, pay later users have experienced issues like overspending and missing payments.' Don't Miss: —with up to 120% bonus shares—before this Uber-style disruption hits the public markets $100k+ in investable assets? – no cost, no obligation. FICO will include BNPL data on upgraded Score 10 and Score 10 T credit models. It wants the new data to provide lenders with "greater visibility into consumers' repayment behaviors, enabling a more comprehensive view of their credit readiness." FICO Vice President and General Manager of B2B Scores Julie May emphasized the impact on young buyers, noting it will "more accurately evaluate credit readiness, especially for consumers whose first credit experience is through BNPL products." Using FICO's Score 10 to roll out the initiative has raised some eyebrows because it won't be included in Score 8, currently the most widely used credit scoring product. In fact, FICO modeling is now up to Score 16 but, like the iPhone, older versions remain broadly popular due to long credit cycles and the need for lenders to invest, train and incorporate newer processes. Trending: Named a TIME Best Invention and Backed by 5,000+ Users, Kara's Air-to-Water Pod Cuts Plastic and Costs — Credit agencies have gathered BNPL loan activity for several years now. But this is a largely unregulated industry and not all payment processors report these transactions. So, a substantial chunk of U.S. lending activity may be missing from current data. FICO's new models will try to fill these gaps but there could be unintended consequences because, according to the survey, nearly one-third of Americans have used the service. Bankrate Senior Industry Analyst Ted Rossman told CNN that young folks with limited credit histories are frequent users, and those most vulnerable to credit downgrades. Given survey results, new models may amplify negative credit scores of those overspending and missing payments. Of course, it's hoped this credit activity will boost scores if debts are paid on time and in promises to aggregate multiple BNPL loans, but dangers abound if old school installment loan scoring seeps into the new models. Its common knowledge that borrowing up to your credit card limit is bad for your score because it signals financial stress. Now consider a young buyer who takes multiple BNPL loans at the same time. With traditional scoring, it looks like the customer is maxing out multiple short-term credit lines, raising all sorts of red flags. Rossman believes that customers who pay their debts promptly should be fine under the new rules, but hedges his bets despite FICO assurances. "Things like frequent opening and closing of accounts would be disastrous for your credit score," he told CNN. "With Buy Now, Pay Later, you're doing that every few weeks or even every few days." Read Next: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? FAIR ISAAC (FICO): Free Stock Analysis Report This article FICO To Roll Out New Scores to Reflect Your "Buy Now, Pay Later" Habits, Impacting Millions of Americans' Credit originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Bloomberg
7 days ago
- Business
- Bloomberg
The FICO Monopoly Is Living on Borrowed Time
Few companies achieve the ultimate branding victory of seeing their name enter everyday language. In finance, one company is up there, joining Google, Xerox and Hoover on this hallowed list. When Americans talk about their 'FICO score' they're referencing a specific product from a specific company, yet the term has become synonymous with creditworthiness itself. That linguistic dominance reflects the market dominance of Fair Isaac Corp. (whose ticker symbol is, of course, FICO). The Bozeman, Montana-based company's credit scores are used by 90% of top lenders, making the company's algorithm the de facto gatekeeper for American consumer finance. The company has monetized this algorithmic moat for decades, turning what began as a consulting firm in 1950s California into a financial-technology powerhouse. Its shares have averaged an annual gain of more than 30% since the crash of 2008, trouncing even the Nasdaq 100, home of the fabled FAANG stocks. That run came to a sudden halt last week. Under new Director Bill Pulte, the Federal Housing Finance Agency moved to allow mortgage lenders to use a competitor's model, VantageScore 4.0, alongside FICO when originating loans for Fannie Mae and Freddie Mac. 'If you use Vantage and not just FICO, for the betterment of the American people and the consumer, you should get better pricing,' posted Pulte. 'It's just math. Predictive math.'
Bloomberg
08-07-2025
- Business
- Bloomberg
FICO Drops, CoreWeave Dips, Big Banks Slide
On this episode of Stock Movers: - Fair Isaac (EFX), better known as FICO, saw shares headed for its worst slide since March 2020, after federal regulators said government-sponsored mortgage entities Fannie Mae and Freddie Mac will be able to use a second firm when determining borrowers' creditworthiness. Federal Housing Finance Agency Director Bill Pulte said in a post on X that Fannie and Freddie will now allow lenders to accept the Vantage 4.0 credit model to 'increase competition' in the credit score said the move should expand credit access to millions of potential borrowers living in rural areas and bring down closing costs. Since joining the FHFA, Pulte has pledged to do 'a full scale review' of all credit bureaus. He also suggested that FICO should focus on being more economical in their pricing. - CoreWeave (CRW) shares dipped after it was downgraded to neutral-equivalent ratings at Stifel and Mizuho, following the company's all-stock acquisition of data-center operator Core Scientific Inc. The Cloud infrastructure provider was also initiated with a hold rating at CFRA while Citi adds a 90-day downside catalyst watch to the stock. - Big bank stocks, including shares of Bank of America (BAC) slid after some analysts warned of downside risks. HSBC is turning cautious on three of the biggest US bank stocks following a record rally that's brought the group within shouting distance of an all-time high. 'Downside risks associated with still-elevated macro uncertainty, potentially slowing economic growth and more interest rate cuts through 2025 and 2026 are generally not factored into the stock prices,' analyst Saul Martinez wrote in a note downgrading JPMorgan Chase & Co., Goldman Sachs Group Inc. and Bank of America Corp. At the same time, 'the repricing of fixed-rate assets, benign credit quality, improving investment banking activity, and a favorable regulatory backdrop are well priced in.'
Bloomberg
08-07-2025
- Business
- Bloomberg
Hong Kong's Tycoons Are Damaging the City's Credit Culture
How creditworthy are Hong Kong's billionaire tycoons? Despite the glamor and prestige they project, the city's old money are dishing out one nasty surprise after another. As bankers and investors wake up to the reality that they might never be made whole, the easy credit culture long afforded to the elite will inevitably come to an end. New World Development Co.'s decision not to repay coupons on its perpetual notes was a rude awakening, but it was by no means an outlier. Emperor International Holdings Ltd., a fellow developer that sells luxury apartments, said it had HK$16.6 billion ($2.1 billion) in bank borrowings that are either overdue or have breached loan covenants, which may result in immediate repayment requests.
Bloomberg
08-07-2025
- Business
- Bloomberg
Fair Isaac Drops as Pulte Lets Fannie, Freddie Use VantageScore
Shares in Fair Isaac Corp., known colloquially as FICO, headed for the worst slide since March 2020 after federal regulators said government-sponsored mortgage entities Fannie Mae and Freddie Mac will be able to use a second firm when determining borrowers' creditworthiness. FICO shares sank 16% as of 2:34 p.m. in New York, on pace for the lowest level since May 27.
