A Fair Isaac Corp. executive says the company’s newest product is “kind of like a Fitbit for your financial health” -- an online tool that helps consumers with poor credit ratings improve their scores.
Fair Isaac, the firm behind the widely used FICO credit score, unveiled a program on Wednesday that it says can help guide consumers to their desired ratings. Geoff Smith, the executive who compared the new FICO Score Planner software to Fitbit Inc.’s popular exercise monitor, said people don’t always know how to improve their credit.
“Consumers are really trying to understand what actions they need to take,” Smith, vice president for consumer scores at San Jose, California-based Fair Isaac, said in an interview. “There’s a lot of guesswork out there.”
To use the tool, which would be offered by Fair Isaac clients such as banks, customers would input their current FICO scores and their target score, as well as a time duration to reach their goal. The Score Planner would show the actions consumers need to take and allow them to track progress, Fair Isaac said in a statement.
FICO scores are used by more than 90 percent of U.S. lenders to predict whether a would-be borrower is an acceptable risk, Fair Isaac said. A good score ranges from 670 to 740, anything above is considered very good, and 850 is the best. About 20 percent of U.S. consumers with a FICO score are below 600, the company said.
Repairing credit can be a time-consuming task. A single late-payment incident might damage a credit rating for only a matter of months, Fair Isaac said. Bouncing back from a more serious episode like a bankruptcy can take years. The new tool can send alerts to help consumers as they rebuild credit, Smith said.
“If the customer might fall off that path a little bit, they’re able to let them know that they’ve fallen off their journey but the goal is still reachable,” he said. “Or maybe the goal is no longer reachable and they have to reset their goal and duration.”
This article was provided by Bloomberg News.