What is FICO Score?
The FICO score is a statistical model that predicts the likelihood of a borrower defaulting on a credit obligation. Scores range from 300 (highest risk) to 850 (lowest risk). The score considers payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%). In whole loan analytics, FICO at origination (original_fico) is used for underwriting and credit assessment. Higher FICO generally correlates with lower default rates and faster prepayment speeds (creditworthy borrowers are more likely to refinance successfully). Standard stratification buckets: 800+, 760-799, 720-759, 680-719, 640-679, 600-639, 560-599, <560.
How LoanBook Uses FICO Score
LoanBook uses original_fico as a standard field and applies it in the Default Model (in the Residential default hazard, 100 FICO points higher cuts the odds of default by about 79%), the Prepay Model (refinance ability), Novel Metrics (underwriting tension index), and CECL calculations. A missing FICO makes no adjustment.
Frequently Asked Questions
What FICO score is considered subprime?
Generally, FICO below 620-640 is considered subprime in residential lending. Different asset classes have different thresholds; consumer lenders may consider 660 as a floor, while Non-QM products may go as low as 500-580.
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