Every US consumer who has used any form of credit knows the name FICO for the way it sizes up their worthiness as a borrower. The number they assign to a consumer’s credit has an incredible amount of power. This score determines your eligibility for a loan, home mortgage, or other types of credit. Those with a high FICO score can attest to how easy loans can be had with a score that is near perfect. In the same way those have had delinquencies on any credit account and to have a low FICO score will find it next to impossible to get approved by any lender. In short, FICO wields a lot of power in the lives of consumers.
Lenders depend on those scores to tell them how safe it is to loan money to a customer. Or how much interest they should charge depending on the level of risk a customer presents. Auto insurance companies even use a FICO score when determining premiums. These companies use the score in their own models to predict the likelihood that a driver will file a claim. Some studies show that a low FICO score has a worse effect on a consumer’s auto insurance premium than traffic violations, and can increase your premium even if you have never filed a claim.
Not only does FICO predict a consumer’s ability to pay back borrowed money, now FICO is getting into the business of forecasting who is likely to be a good driver. Along with eDriving, a company which provides tech-assisted driver training and risk reduction, FICO has come up with a method to score how risky you are behind the wheel.
Measuring your score.
eDriving is the smartphone software that a driver installs to build the FICO driver score. eDriving captures driver activity such as cell phone use, acceleration, speeding and using the brakes, and uses these to analyze driver behavior. Similar to the way your credit activity is analyzed and scored by FICO, your driver activity will be used to create a driver history and an FICO Safe Driving Score. This means drivers who are distracted by texting or talking on a cell phone would see a lower score than drivers who do not use a cell phone while they are driving.
With FICO credit scores, consumers who pay off their credit balances consistently, never make a late payment, and only use a modest percentage of their available credit build a history that is positive.The FICO score assigned takes into account your payment record and credit behavior or how responsible a consumer is overall with borrowing. The FICO safe autoscore will accumulate drivers behavioral data and build a driver history similar to a credit history.
Who Wants To Know?
Car manufacturers, insurance companies, fleet management companies and safety organizations are just some of the groups who would be interested in using the FICO driver score. Your score could easily be the most accurate way for an auto insurance company to determine what your premium should be. A life insurance company might use the data as a factor in your life insurance premiums. In addition, drivers in the transport industry and employees who use a corporate car during work would need to give access to this information when applying for a job.
Not only would companies be able to use this information, but parents of teenage drivers would certainly want to be able to monitor the safety of their teen behind the wheel. The biggest market for FICO’s new score will be the fleet industry and new drivers.
Whether or not, and how fast the market expands for this type of score might depend on drivers’ willingness to be monitored at all times that they are driving a car. While some would resist the intrusive aspect of their data being stored and reported to unknown parties, other drivers would welcome the chance to be tracked at all times if it meant lower insurance payments. It is well known that the average driver pays too much for car insurance because companies insure drivers based on groupings of age and gender. If they were able to base insurance premiums on individual factors, most people would save money. Insurance companies could truly custom-fit a plan for each driver.
At least, this is how it worked in the UK when an auto insurance company began requiring customers to install a telematics box in their car to track driver safety. The insurance company, called Drive Like A Girl, was able to offer lower premiums to the safest drivers among their customers. And the safest drivers were- you guessed it- women.
There are other safety benefits to being tracked behind the steering wheel. Emergency situations such as a car wreck could automatically alert police and fire services instead of relying on a driver to be able to contact them. Even given the privacy concerns, this benefit could convince some reluctant drivers to try the system. Either way, now that the ability to gather this data is available, expect the FICO Safe Driving Score to eventually play a bigger part of our lives on the road.