Equifax, FICO team up to sell consumer data

Two consumer-credit giants plan to start working together to sell consumers’ data to banks, the latest attempt to feed banks’ appetite for more information on customers.

Equifax Inc. and Fair Isaac Corp., creator of the widely used FICO credit score, started pitching each other’s services earlier this month, and the companies are expected to announce the partnership Wednesday. Both companies already sell their services to banks, but now their sales employees will pitch each other’s services as well. Sometimes the companies will approach clients together.

Equifax, a credit-reporting giant still trying to recover from its massive 2017 data breach, maintains extensive data on U.S. adults that often includes their income, bank account balances and whether they pay their gas and cellphone bills. FICO’s software analyzes the data to help banks get a better read on loan applicants.

The partnership is the latest effort by companies that have been the bedrock of the U.S. consumer credit system to diversify beyond the nuts and bolts of credit reports and scores.

For decades, most U.S. lenders have reviewed loan applicants’ reports and scores to determine whether to approve them and what interest rate to charge. After years of relatively cautious lending, banks and other lenders are seeking additional consumer data to help them make loans to more borrowers, including people with little credit history or with blemishes. Credit-reporting and -scoring firms have been pivoting to address the demand.

Late last year, FICO and another credit-reporting giant, Experian Plc, said they would begin factoring how consumers manage their bank accounts into credit scores. Soon after, Experian separately said it would add cellphone and utility payments into its credit reports and the FICO scores it sells to lenders. The new methodologies, which are optional for consumers, are designed to boost the number of approvals for credit cards, personal loans and other products.

Equifax and FICO argue that buying their services together will help lenders make underwriting decisions more quickly, especially for borrowers with thin credit histories. They also say that lenders will be able to make more precise decisions about what products to pitch to a customer, such as a plain vanilla credit card versus a premium rewards card, and will be able to better screen people who apply for bank accounts.

But the companies will face competition from data providers and financial technology firms that do the same, and banks’ own in-house analytics resources.

Equifax, Experian and another large competitor TransUnion have for years been amassing growing piles of data about American adults that go far beyond people’s history managing their debts. At Equifax that includes information on people’s employers, their brokerage accounts and other information. Most of that extra data hasn’t made its way into credit reports or FICO credit scores, but credit-reporting firms have been selling that data separately to lenders.

Deciding which loan applicants to approve is complex. Making risky borrowers look more creditworthy can expose lenders to default risk. Denying someone who additional data might prove creditworthy—like someone who pays their cellphone and other non-loan bills on time—would hurt revenue. Approving a consumer whose credit reports and scores look good but has other hidden red flags, such as minimal savings, would elevate the lender’s risk.

The FICO-Equifax deal was spearheaded by the companies’ chief executives. FICO CEO Will Lansing and Equifax CEO Mark Begor have known each other for decades, and Mr. Begor was a FICO board member until he took over Equifax last year.


Equifax has lost business because of the 2017 breach, but the company said it “has made enormous progress” since the hack. Mr. Begor said in an interview last week that Equifax is no longer in the “penalty box” with clients.

Equifax remains under investigation by federal and state regulators over the breach. It has said it is cooperating.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com