Definition
The PinnacleSM score is a version of the NextGen scoring model that is tweaked and marketed by Equifax to lenders in an attempt to more accurately predict repayment risk among borrowers with poor credit histories.
Analysis
Demand for NextGen scoring products rose during 2004 to 2006 as lenders scrambled to profit from expansion of the subprime mortgage market. Equifax markets their version of this risk scoring model to lenders that are seeking to profit from borrowers that typically must pay higher rates of interest to compensate for their higher predicted risk of default.
Equifax markets the PinnacleSM score to lenders that are seeking to more accurately predict repayment, delinquency and default risks among new applicants. Since fee income is one of the biggest forms of revenue (an estimated 40% of credit card issuer income), many lenders are looking for consumers that are likely to repay loans while occasionally making late payments.
Competitors to the PinnacleSM score are the FICO Risk Score, NextGen product by TransUnion and the Experian/Fair Isaac Advanced Risk Score by Experian. These three products are based on the NextGen scoring model developed by Fair Isaac Corporation. These products are sold to lenders and other commercial buyers. There is currently no version available as a consumer product.
