In doing so, they are in keeping with the recent thinking set by leading consumer columnist Ken Harney in the Washington Post.

In two recent columns, Harney reported on NextGen's superior predictive power and fairness, encouraging consumers to ask lenders if they use the NextGen score. He also wrote that in interviews, mortgage lenders frequently explained that they had not switched to the NextGen score because the country's two dominant mortgage purchasers, Fannie Mae and Freddie Mac, "haven't given them the green light to do so."

Now, with its acceptance of NextGen scores, the global leader in residential mortgage-backed securities risk analysis is facilitating industry conversion. Backing up its slogan, Standard & Poor's is "Setting the Standard" in recognizing and applying new, advanced technology.

Complementary powers

Standard & Poor's is accepting NextGen scores as a means to assess risk and predict losses associated with mortgage backed securities. LEVELS Version 5.6 will have the ability to differentiate the NextGen score from the classic FICO score, the industry-standard decision solution used to make billions of credit decisions each year.

In a recent release of its Investor Outlook bulletin, Standard & Poor's reported that "The NextGen FICO score has been shown to offer significantly enhanced credit risk assessment, thereby better distinguishing a truly serious credit risk from a less serious one." The bulletin went on to say that, "Standard & Poor's continues to be at the forefront of technological advances by constantly updating our analytic models to enable us to more accurately analyze a constantly changing structured environment."

Standard & Poor's anticipates that NextGen's new development design will result in superior predictive power over Fair Isaac's classic FICO score. (Click here for details on NextGen). NextGen provides better separation of goods and bads, and a broader score distribution for finer segmentation and risk assessment.

"We are delighted that Standard and Poor's recognizes the advanced predictive benefits and precision of Fair Isaac's NextGen FICO scores for mortgage lenders," said Cheri St. John, vice president of Global Scoring Solutions at Fair Isaac. "NextGen scores provide financial institutions with unsurpassed broad-based risk assessment. Their acceptance will allow Standard and Poor's to help lenders tap into a powerful credit risk assessment solution, and will help accelerate widespread adoption of our NextGen scores in the mortgage loan industry."

Ken Harney concurs

In his November 23, 2002, article of his column, "The Nation's Housing," Harney expounded on NextGen's superior design and its benefits to consumers. As a writer for consumer interests, his focus was on how a NextGen score could elevate a lower-risk consumer's score and result in a better rate.

Although not explicitly stated in Harney's article, NextGen's design and resulting scores are of equal benefit to consumers and lenders. Its more accurate risk assessment — and now Standard & Poor's acceptance — will help consumers and lenders better pinpoint how much credit burden any consumer can bear.

A week later Harney reported on Fair Isaac research that showed that 57% of consumers scored higher with the NextGen scores than with the FICO scores. Other Fair Isaac research has shown that the use of NextGen scores can boost lenders' originations profitability by over $10 per mortgage loan scored, while maintaining their application volumes and reducing write-offs by 15% to 20%.

For more information, contact your Fair Isaac representative or email info@fairisaac.com.