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After being in development for several years, the FICO® Resilience Index was finally launched last month and is now available to lenders and consumers.
The FICO Resilience Index is a tool designed to help predict how resilient a person's credit may be in the event of an economic downturn. The tool is primarily intended for use by lenders, but consumers also have access to it. The FICO Resilience Index is not designed to replace the FICO® Score, but rather complement it by giving a deeper insight into consumer sensitivities for more precise credit decisioning.
The resilience index score ranges from 1 to 99. In contrast to FICO Score, which ranges from 850 to 300 where lower score means lower creditworthiness, lower resilience index score is better. Consumers with resilient index scores in the 1 to 44 range are viewed as the most prepared and able to weather an economic shift, while a score over 70 indicates "very sensitive" consumers, meaning they are most unlikely to pay as agreed in the event of recession.
The FICO Resilient Index uses information provided in credit reports only. The most resilient consumers tend to have lower balances, longer credit histories, fewer active accounts, and fewer credit inquiries in the last year. To receive your FICO Resilience Index, you should have at least one credit account opened for six months, which is reported to credit bureaus.
The FICO Resilience Index won't affect consumers' credit score but may have an impact on the lenders' credit decisioning process. However, as with any new financial model, it may take time until banks fully integrate the new tool into their credit approval process.