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MINNEAPOLIS — Dealers who have potential buyers with
subprime credit standings might have a better chance of getting them financed
if FICO's quarterly survey of bank risk professionals is any indication.

More than 50 percent of respondents expected the auto sector
to see the largest increase in subprime borrowing this year. The survey
indicated 38 percent of respondents expected the largest increase to be in
credit cards, and 12 percent expected the largest increase to be in residential
mortgages.

When asked about overall subprime lending activity, 44
percent of respondents felt that such lending this year would remain flat
compared to 2011.

"We are clearly seeing a loosening of credit in the auto
finance market, with lenders responding to increased consumer demand," said
Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. "This
is good news for car dealers, and it should help the auto sector continue its
recovery.

"However, underwriting for other types of consumer lending,
particularly mortgages, is still tight," Jennings cautioned. "Lenders aren't
yet ready to increase their exposure for the sake of growing their mortgage
portfolios."

The survey, conducted for FICO by the Professional Risk
Managers' International Association (PRMIA), also found that survey respondents
expected delinquency rates on most types of consumer loans to remain flat or
decline, indicating that consumers are regaining their credit health. The sole
exception to this outlook was student loans, with most respondents expecting
delinquencies to increase.

State of Consumer Credit Health: Stable

When asked about their expectations during the next six
months, the majority of respondents expected delinquency rates to remain flat
or decrease for credit cards (69 percent), vehicle loans (77 percent),
mortgages (73 percent) and small business loans (72 percent).

However, a majority of respondents (64 percent) expected
delinquencies on student loans to increase. This is the third consecutive
quarter that respondents have predicted an increase in student loan
delinquencies.

"I see these results as quite positive, save for student
lending," Jennings surmised.

"Last quarter we saw a sharp uptick in sentiment regarding
consumer credit, with more respondents expecting things to improve than we had
seen at any point in the previous two years," he continued. "Now lenders are
expecting things to at least stay the same, and quite possibly improve further.
These results indicate that bankers believe consumer health has turned a
corner."