California based analytics software firm FICO has recently announced the launch of FICO Score in India. The company provides credit scoring services in the United States and is also rolling out an alternative data score, FICO Score X Data India. The two credit rating services- FICO Score and FICO Score X Data India- will help the Indian lenders in assessing risk with greater precision. It will also provide them greater flexibility so that they can extend credit to more people. The FICO Score X Data India will be launched in partnership with Lenddo- a Singapore-based company.
The FICO Score will be based on the data provided by other reputable credit bureaus of the country. The FICO Score X Data India will be based on non-traditional information such as a person’s digital footprints, social media and smartphone records. As per a recent World Bank report, about half of India’s adult population is unbanked or under-banked. This non-traditional scoring method will help Indian lenders tap a larger section of the market that went unscorable because of no credit history.
According to a report published by Data Quest India, Lenddo co-founder and chief executive Richard Eldridge said, “We believe that helping qualified low- and middle-income consumers gain access to credit will improve their lives and quite possibly transform Indian society.”
When credit history will no longer be needed for obtaining loans, more qualified customers can be brought into the mainstream financial purview, thus promoting the financial inclusion program led by the Modi government. It is also beneficial for the customers as they can formally obtain loans at much lower rates as compared to the informal banking sectors that charge extremely high rates.