Analytic software leader FICO has seen strong demand by telecommunications providers for the FICO Score to use in securitization. FICO has created a program that helps carriers and other participants provide the risk assessment that is a key ingredient in creating bonds backed by equipment installment plans, which let customers pay off their mobile device in installments.
The ratings agency Standard & Poor´s estimates there are USD35 billion to USD40 billion of mobile device contracts in the US. The first security, backed by 2.5 million equipment installment plans, was issued in July. Mortgages and other loan types are already widely securitized in the U.S.
Under the new program, a mobile provider that purchases FICO Scores on its customers whose equipment installment plans are being securitized can share summary statistics regarding the FICO Score distribution with third parties as part of the securitization performance documentation made available to rating agencies and investors.
Telecommunication providers can also structure the purchase of these FICO Scores for use in their risk management decisions at origination or account review. Such FICO Scores are also eligible for the FICO Score Open Access program, which allows credit grantors to share the FICO Scores they rely on for risk management with their customers at no additional fee from FICO.
FICO powers decisions that help people and businesses around the world prosper. Founded in 1956 and based in Silicon Valley, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 170 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, telecommunications, health care, retail and many other industries.