SAN JOSE, Calif.—FICO has launched a credit risk prognosis tool that financial institutions can use to stress-test their consumer loan portfolios.
FICO's Score Economic Calibration Service 2.0 is designed to forecast how consumer credit risk could change under different economic scenarios as a way to measure eventual financial institution losses and capital reserve needs.
Credit unions and banks can use the software to comply with regulations and to make capital planning decisions at a portfolio and individual account level, Jim Wehmann, executive vice president of FICO scores, said in a statement Wednesday.
The new tool combines FICO's methodology with Moody's Analytics projections that assess about 1,800 economic variables including labor market trends and interest rates. Moody's national and regional economic data forecasts are based on the Corelogic Home Price Index, the Dodd-Frank Act's Stress Test scenarios and the Federal Reserve Comprehensive Capital Analysis and Review to provide a forward-looking estimate of consumer delinquency risk for each FICO score range.