FICO Teams With Plaid to Include Cash Flow Data in Credit Scoring

FICO (Fair Isaac Corp.) has partnered with open-banking platform Plaid Inc. to develop the UltraFICO score, a credit score that includes real-time cash-flow data from Plaid. The new scoring model is intended to give lenders a more comprehensive view of a consumer’s credit readiness.

The UltraFICO score will weigh a consumer’s historical and current information about money flowing into and out of her transaction accounts, such as checking, savings, and money market accounts. Lenders can use the UltraFICO score in conjunction with traditional FICO credit scoring models to better determine whether to approve or decline a loan application, FICO says.

Plaid’s platform pulls consumer-permissioned financial data from more than 12,000 financial institutions to enable consumers to connect their bank accounts to financial apps.

In addition to improving a lender’s risk-management capabilities, the blend of  traditional credit information with Plaid’s real-time cash-flow data will enable lenders to optimize offers and expand credit access to millions, the parties say.

“This broad scoring assessment gives lenders a more complete financial story for a more comprehensive view of credit readiness,” Julie May, vice president and general manager of B2B Scores at FICO, says by email. “Integrating cash-flow data gives lenders the predictive insights they need to say ‘yes’ more often and more confidently.”

May adds that including Plaid’s data in FICO’s modeling technology “doesn’t replace traditional credit information.” Instead, the cash-flow data enables a more complete picture of a consumer’s financial health. “Our rigorous testing across millions of consumers and multiple data sources has shown how cash-flow data, in particular, offers unprecedented insights into financial-management behaviors that strongly predict creditworthiness – creating upside for lenders and consumers alike,” May says.

As open banking continues to develop in the United States, lenders, payments platforms, and consumers are becoming more comfortable with securely sharing account data, observers say.

“The market recognizes the value of cash-flow insights, and lenders are actively looking for ways to integrate this data into underwriting and decisioning workflows without operational complexity,” May adds.