Definition
Fair Isaac Corporation is the developer of risk scoring models that assess creditworthiness based on credit history.
Analysis
Originally founded as Fair Isaac and Company, the organization pioneered the use of credit scores to predict lending risks. Bill Fair and Earl Isaac created credit scoring in a form similar to what is still used today. The company was renamed Fair Isaac Corporation in 2003.
Fair Isaac continuously researches credit trends and periodically makes modifications to credit scoring formulas. These newer models are marketed to lenders and consumers alike, often through credit bureaus who frequently make their own modifications to the scoring formulas.
In 2006, the three main credit bureaus announced a new scoring model called VantageScore. This was significant, as for the first time, the three main credit bureaus collaborated on the project in which Fair Isaac was not invited.
The future of Fair Isaac Corporation will depend on its ability to stay on the leading edge of risk scoring models and to market such services to the lenders and consumers that want to buy them. For now, the future of Fair Isaac is still secure, since VantageScore has struggled to gain market share.
