Definition
The FICO Risk Score, NextGen is TransUnion’s version of the NextGen scoring model that is geared toward lenders serving borrowers across the risk spectrum.
Analysis
As demand for subprime lending products rose from 2004 to 2006, TransUnion adapted the NextGen scoring model from Fair Isaac Corporation to create their own version. The FICO Risk Score, NextGen addresses lender demands for enhanced predictability of repayment among borrowers with poor credit.
Lenders that subscribe to this scoring model expect to be able to more aggressively target underserved markets. This is a key component of the Community Reinvestment Act, which requires lenders to make services available to disadvantaged groups.
Competitors to the FICO Risk Score, NextGen include the Experian/Fair Isaac Advanced Risk Score available from Experian and the PinnacleSM score marketed by Equifax.
