Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Jim Wehmann, executive vice president of FICO Scores, to discuss some of FICO’s newest innovations, including the FICO Score Planner.

Q: What investments has FICO made to empower lenders to safely and responsibly expand access to credit for consumers?

A: We’ve beeFICOn the leader in credit scoring for 29 years, since the introduction of the very first FICO score. In that time, we’ve developed a number of scores including the latest FICO Score 9, the most predictive credit score to date.  We’ve also significantly invested in leveraging new alternative data sources to help increase credit access. We recently announced our latest version of the FICO Score XD which includes telco and rental data. The FICO Score XD goes a long way to helping the 53 million Americans who don’t have a credit score. It scores 26.5 million people, about 11.8 million who have never had access to any kind of credit — many of them are younger people and people new to country.

FICO Score XD for the U.S. is part of our global financial inclusion initiative where we are working in more than 25 countries around the world, to facilitate credit access for about 1 billion people, in places like India, Mexico and China. We are learning a lot from the work we’re doing outside the U.S. and now have access to different types of data such as mobile device data, which could be very impactful. It’s exciting to bring these learnings to markets around the world. Not to mention to see the new international scores being adopted and used to help billions of people.

Q: How is FICO innovating to foster financial inclusion?

A: We continue to look at a variety of alternative data to help score more people. In countries where there are hundreds of millions outside the traditional credit model, we’re working with data in a way that looks a little different than what we do here in the U.S. In one region, when an application comes in that information for a report is pulled at the time the decision needs to be made, instead of organizing and storing it ahead of time. These insights from outside the U.S. could have broad implications here as well. For the U.S. market, in addition to FICO Score XD being available for a few years now, which leverages alternative data, we are also currently conducting research around consumer permissioned DDA data. There really is a lot on the horizon to broaden financial inclusion.

Q: What types of alternative data is FICO using to determine a reliable, predictive credit score?

A: We are continually researching new robust types of data sets and then ensuring it meets the compliance and regulatory framework in each country, as well as our own trusted FICO criteria. This could include data captured from phone usage such as ways people use their phone or the times they use their phones. In all of this data analysis, we conduct indepth research and develop models based on whether they are predictive or not, then look to create innovative product enhancements. We are casting a wide net and then filtering through the appropriate consumer regulatory framework.

Q: What sets FICO apart in the credit scoring space?

A: One key area is that we are independent. We’re not a credit bureau, so we don’t own or control the data. That independence enables us to work with all kinds of different data sets, and then fairly, accurately gauge the predictability and reliability of those data sets.

When it comes to improving financial inclusion, one school of thought is that if you just eliminate the minimum scoring criteria you will be able to score more people. However, we determined that this is not a reliable approach — it won’t do anything to help credit access. But if you look outside traditional credit data alone, you can get alternative data that can open some doors, so our independence becomes a strong differentiator.

Also, our track record sets us apart because of the trust that people have in FICO. We’re known as a very reliable, industry-standard score, and people know that we are only going to do things that are at the highest standard.

Finally, our commitment to consumers, through consumer education and financial inclusion. There are over 100 institutions participating in the FICO Score Open Access program to provide over 250 million consumer accounts their FICO credit score for free. When it comes to our efforts in financial inclusion, we are not approaching that through easy, simple shortcuts, but difficult methods that take a very high investment and are very impactful. We will always invest in these things to help lenders safely and responsibly expand access to credit, while providing transparency and educational materials for consumers.

Q: How do you see the industry changing to meet consumers’ needs along their credit journey and facilitating credit access?

A: There’s a lot of innovation going on within credit scoring and tapping into new alternative data to help increase credit access. There is also a heightened focus on consumer financial education and empowerment. In the future, consumers will have even more control over their financial health and data. It is very exciting to see innovation to help people meet their credit score and financial goals!

Q: What is on the horizon for FICO to continue addressing the need for increased financial literacy and credit access?

A: We’re going to continue efforts around our FICO Score Open Access program including working with a range of financial counselors, both government and nonprofit. In the consumer education space, we have just launched the FICO Score Planner, which is a new way for consumers to understand what goes into their FICO Score. It’s a tool where a consumer can put in a desired FICO Score and a time frame, and then the planner helps them understand the actions they can take to get to that desired score. FICO is really at the nexus of consumer engagement, empowerment and financial inclusion.