FICO says it is experiencing wider use of its credit-scoring models for the securitization of equipment installment plan receivables by wireless carriers.
The analytics software company reported Monday it has seen an increased demand from telecommunications providers using the scores as part of their plans to bundle the device equipment financing plans into asset-backed vehicles. The fledgling securitization asset-class will provide a new “multi-million dollar market” for FICO scores, the company stated.
The scores will be part of the crucial data used by ratings agencies and investors in weighing the risks of the financing plans, which are used to supply new tablets and phones into the hands of customers. FICO said it is introducing a new analytics program that will provide summary statistics to investors and ratings agencies of the distribution of scores from the contracts being securitized by mobile providers.
They can also be used it contract origination and account review, and are eligible for consumer disclosure under FICO’s open access program.
FICO did not name any of the carriers it is contracting with, but Verizon is thus far the only carrier to issue public securitizations of mobile handset financing, in a pair of deals this year. The company’s most recent deal this month is a $1.4 billion securitization that had a weighted average prime FICO score distribution of 709.
Standard & Poor’s estimates there are between $35 billion and $40 billion in mobile device contracts.