© 2014 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. The FICO ® Score 25 Years of Democratizing Access to Credit Brian Cooper VP, Scores & Analytics FICO

© 2014 Fair Isaac Corporation. Confidential. FICO ® Scores…safe, sound, innovative, global and consumer friendly for the next 25 years! 2

Agenda © 2014 Fair Isaac Corporation. Confidential. ► Our 25 Year Journey to Date ► Latest Developments ► What This Means for Lenders ► A Consumer Perspective ► The Journey Forward 3

© 2014 Fair Isaac Corporation. Confidential FICO ® Score is invented 1991 FICO ® Score at all three major U.S. CRAs 1995 Fannie Mae and Freddie Mac endorse the use of FICO ® Scores 1993 Specialized FICO ® Scores 2004 Global FICO ® Score 2009 FICO ® Score FICO ® Score Open Access 2001 myFICO ® service billionth FICO ® Score sold 2010 FICO ® Economic Impact Index 2014 FICO ® Score FICO ® Score in South Africa FICO ® Score Evolution © 2014 Fair Isaac Corporation. Confidential.4

FICO ® Score Solution Set ► Critical in billions of decisions each year ► 90 of top 100 largest US financial institutions use FICO ® Scores ► Deployed in 20+ countries and counting ► Used by rating agencies and secondary market ► Lenders can share billions of FICO ® Scores they use with customers ► Strengthen customer relationships by adding value ► Increase profitability and growth ► 32million consumers and growing ► Consumer Access to their FICO ® Score ► Only single source for identity, credit, and FICO ® Score monitoring ► Only myFICO ® Service can provide FICO ® Scores based on data from each of the 3 US CRAs Open Access 5

© 2014 Fair Isaac Corporation. Confidential. ► New innovations ► More refined assessment of collection information ► More accurate treatment of thin files ► Designed to ease adoption: ► Same score range ► No new reason codes ► Moderate score movement ► Enhanced support for regulatory compliance/model governance FICO ® Score 9 6 The most current and predictive FICO ® Score

© 2014 Fair Isaac Corporation. Confidential. ► FICO ® Score 8, released in 2008, was developed during calmer economic conditions ► FICO ® Score 9 reflects better the new economic conditions The Changing Credit Landscape FICO ® Score 8 Development Sample Composition of Bads 2006–2008 FICO ® Score 9 Development Sample Composition of Bads 2011–2013 7

© 2014 Fair Isaac Corporation. Confidential. FICO ® Score 9 ► Be Current: ► Grow with more accurate scores based on today’s consumer credit behavior ► Be Compliant: ► The most current, fully documented FICO ® Score ever ► Be Adaptive: ► Backward compatibility eases adoption and impact to operations The Most Current and Predictive FICO ® Score 8

© 2014 Fair Isaac Corporation. Confidential. Market Drivers for FICO ® Scores Availability of credit data expanding around the world Evolving regulatory themes globally The ability to align scores across countries Meaningful, comparable risk assessment across countries Models that work in any market with bureau data Consistent decisions across portfolios, regions, countries 9

© 2014 Fair Isaac Corporation. Confidential. A Global Perspective GUYANA SURINAME FRENCH GUIANA CUBA DENMARK IRAQ IRAN SRI LANKA NORTH KOREA CAMBODIA LAOS VIETNAM FICO ® Score Deployment Legend FICO ® Score Deployed FICO ® Score at Credit Bureau FICO ® Score Capable 10

© 2014 Fair Isaac Corporation. Confidential. Multi-functional 3-digit Numbers FICO ® Scores Serve Many Purposes 11 ►D►Decision Key ►P►Portfolio Measure ►B►Benchmark ►C►Common Currency ►C►Consumer Engagement

© 2014 Fair Isaac Corporation. Confidential. Regulatory focus on consumer business practices Proposals for “free score” legislation and regulation Appeals for increased consumer education Help detect, mitigate ID Theft and data breach harm Industry Pressures to Increase Consumer Education and Transparency Provide Opportunity 12

© 2014 Fair Isaac Corporation. Confidential. ► Lenders make available for FREE to customers ► Provides the actual FICO ® Score purchased to make customer decisions ► Helps address issues in an industry facing regulatory and other pressures ► Helps drive increased online engagement, share of wallet, loyalty and customer satisfaction FICO ® Score Open Access—A Valuable Program that… 13

© 2014 Fair Isaac Corporation. Confidential. How Credit Education Increases Customer Lifetime Value Providing customers with free access to FICO ® Scores and credit education can deepen customer relationships and even motivate some customers to adopt behaviors that would improve their overall financial health 14

© 2014 Fair Isaac Corporation. Confidential. What Does This Mean for Consumers? 15

© 2014 Fair Isaac Corporation. Confidential. “Lenders believe the new standards will have a positive impact on the economy…” Nessa Feddis Senior Vice President, Consumer Protection at the American Bankers Association “Credit Scores Could Rise With FICO’s New Model” The New York Times “Changes Could Lead to More Bank Lending, Easier Credit for Some Consumers” The Wall Street Journal “Medical debt will carry less weight in FICO's new credit-score model” The Washington Post “…we welcome steps by industry to adjust how it weighs medical debt…” Moira Vahey CFPB Spokeswoman “This move will ultimately make a real difference in the lives of millions of Americans…” Steve Brown President, National Association of Realtors Media and Market Reaction to FICO ® Score 9 16

© 2014 Fair Isaac Corporation. Confidential. What Does The Future Hold? 17

© 2014 Fair Isaac Corporation. Confidential. Social Media—Lots of Questions As a lender, would you be happy to use Social media data in a risk model? As a consumer, would you be happy to have your social media data used in risk models? As a consumer would you be happy to be denied credit on the basis of your social media data? 18

© 2014 Fair Isaac Corporation. Confidential.  Regulatory compliant  Depth and detail  Broad scope of coverage  Accurate and reliable  Predictive  Orthogonal What Data Should We Use? 19

© 2014 Fair Isaac Corporation. Confidential. Expanding the Scoreable Population 20 FICO ® Score Minimum Scoring Criteria The credit file needs one trade line reported by a creditor within the last six months. The credit file needs one trade line that is at least six months old

© 2014 Fair Isaac Corporation. Confidential. ► Developed using FICO’s proprietary modeling platform and segmented scoring technology ► Pilot scores designed as “second chance” model to address unscoreable applicants ► Same look and feel as the FICO ® Score ► Attention to regulatory compliance using palatable predictive data Alternative Credit Data Score 21

© 2014 Fair Isaac Corporation. Confidential. FICO ® Score Core Principles 22

© 2014 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. Brian Cooper Thank You! 23

© 2014 Fair Isaac Corporation. Confidential. Learn More at FICO World Related Sessions ► Leveraging Alternative Credit Data to Make Better Risk Decisions ► How Credit Education Increases Customer Lifetime Value ► Fact vs Fiction: Demystifying Credit Score Features Products in Solution Center ► Unveiling FICO ® Score 9—Your Credit Score for the New Normal ► FICO ® Score Open Access Experts at FICO World ► Darlene Goins ► Freddie Huynh ► Dave Shellenberger White Papers Online ► To Score or Not to Score? ► Curing Credit Score Confusion—Tens of Millions at a Time for Free Blogs ► 24

© 2014 Fair Isaac Corporation. Confidential. Please rate this session online! 25 Brian Cooper