What is the FICO Resilience Index?

The FICO Resilience Index is a measure of a consumer’s “financial resilience” and ability for repayment during times of economic uncertainty. It was designed to be used in tandem with a traditional credit score and give lenders a better idea of who is most likely to repay debt obligations during an economic downturn.

The score ranges from 1 to 99, with the lower scale denoting a consumer who is more likely to repay their debt obligations during an economic downturn. Those with a score ranging from 1 to 44 are seen as most prepared for a negative change in the economic landscape. It’s different from other FICO scores in that is meant to show lenders who is a good credit risk during a recession (i.e. like the Great Recession).

What is The Index Designed For?

The index is designed to help lenders gauge who is a good credit risk during times of economic turbulence and designed to help consumers who have retained good payment history during a recession (most notably during the 2008-2009 Recession).

Is There Credit Inequality Among Different Groups of People and Segments of The Population?

Yes, there is definitely credit inequality among different groups of people and segments of the population. Although the FICO scoring system and algorithm is meant to be unbiased, negative credit scoring does most often affect minority groups. Minority groups are much more likely to be “credit invisible”. One of the main reasons for this occurs is due to fact that these groups most often have inaccurate reporting on their credit data. The most common negatives remarks include civil judgements, tax liens, or types of misreported public information, etc.

What Does The FICO Resilience Index Help?

The FICO Resilience Index may help to level the playing field for people of diverse backgrounds, however this more so depends on their data reported during the Great Recession and other times of economic uncertainty. The Resilience Index will serve to help people with fair credit who retained good payment history during downturns but the impact of the Index will be more dependent on whether banks and lenders actually use the Index. FICO has released the FICO 10.0 scoring model but most lenders are still using FICO 8.0 and have yet to begin using FICO 9.0.