Synchrony Financial has reduced its reliance on traditional credit scores with a system called PRISM, developed by its internal innovation team. The system weighs over 9,000 key data points when someone applies for a credit card. The technology was engineered to lean both on outside data as well as Synchrony’s own past experience with consumers who it was already serving through other cards. Max Axler, EVP and chief credit officer at Synchrony explains that for many Americans a store-connected credit card account is one of their first card experiences, so the company has touched many, many people. David Chau, SVP of credit technology strategy explains that the new approach also included use of “dynamic decisioning.” In brief, this means that instead of taking a linear approach to the credit granting decision, the system picks each next bit of data to grab based on what it has been seeing thus far. The goal was not only to improve credit evaluation up front, with new consumers, but to monitor creditworthiness on an ongoing basis, in every monthly cycle, as well as within cycles, when warranted. This can result in tweaking credit lines up or down, depending on what PRISM sees. As PRISM has been adopted and evolved, “it has made us much less reliant on credit scores,” says Axler. That was particularly helpful during the pandemic period. Axler explains that government stimulus checks, payment and collection moratoria, and other factors resulted in inflated credit scores for many consumers — levels that wouldn’t reflect future realities. Beyond those factors, Axler says credit scores have been impacted by credit score improvement programs that use methods such as granting credit and reporting it to bureaus, but not actually advancing the funds to the “borrower.” “It immediately increases your score,” says Axler, but not in a way that Synchrony considers desirable. In fact, he says, the company now discounts certain third parties’ efforts when encountered in consumers’ credit files.
On the other hand, despite some of the headlines in recent months about federal student loans, Axler says that those borrowers can actually be good risks. A key factor is to recognize that, given the nature of the credit, they are disproportionately younger and at the beginning of their credit journey. Sifting among each credit population for sub-populations that represent better risks is actually part of what PRISM was built for. Axler explains that just as a glass prism refracts a beam of white light into its component parts, the system is designed to break larger groups into distinct smaller groups. All this said, if you were to hold raw credit performance numbers at Synchrony alongside other issuers’, you would not immediately see the benefits of PRISM. That reflects how Synchrony’s operation intertwines with its retailer partners, and its goal to not be constantly widening and opening the credit aperture for each retailer’s card program.