What is the FICO® Resilience Index?
The FICO Resilience Index is a tool designed to be used by lenders to help predict how resilient a person's credit may be in the event of an economic downturn, including either a national recession or a regional downturn.
Consumers may have different levels of resilience to an economic downturn depending on their individual credit profiles. Some consumers will be able to weather an economic downturn better than others. Lenders may use this index to identify consumers that are more likely to pay as agreed in the event of a recession.
The FICO Resilience Index has a range of 1-99, where lower values indicate a person may be more resilient in the event of an economic downturn.
How was the index created?
Because it's focused on predicting how resilient a person's credit may be in the event of an economic downturn, the index uses credit bureau information only.
To create the index, FICO evaluated hundreds of thousands of anonymous credit profiles from several points in time—including before and after the Great Recession. We looked for patterns in consumers' profiles who ended up missing or making payments in the Great Recession. Consumers who were considered more sensitive to financial stress presented a greater risk of default while the consumers that were considered more resilient were more likely to continue to make on time payments.
If your credit profile looks similar to those that were considered more resilient, your FICO Resilience Index will likely be lower.
It's different from your FICO® Scores
FICO Scores are designed to predict credit risk independent of the economy. The FICO Resilience Index is not designed to measure consumers' current credit risk, but rather to predict consumers' resilience in the event of an economic downturn, including either a national recession or a regional downturn.
Lenders will likely use the FICO Resilience Index in combination with FICO Scores and other information. Lenders can use this to help identify credit risk for people within a FICO Score range (680-700, for example) in the face of an economic downturn. Put another way in this example, the FICO Resilience Index answers the question, "Which consumers with FICO Scores between 680 and 700 may be more likely to be considered resilient in the event of an economic downturn?"
What the most resilient consumers look like
The most resilient individuals (those who may be less likely to be affected in the event of an economic downturn) may be those who tend to have a mix of different types of credit, lower balances, a longer credit history, fewer active accounts, less activity searching for new credit and a history of paying their bills on time.
How will lenders use the FICO Resilience Index?
Each lender will determine if they want to use the index and how they will use it. For example, some lenders may track and monitor their customers' index so they can more quickly reach out with solutions and programs to help the customer make more informed credit management decisions.