Cabela's 2012 Annual Report Download - page 98

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88
CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
Credit Quality Indicators, Delinquent, and Non-Accrual Loans:
The Financial Services segment segregates the loan portfolio into loans that have been restructured and
other credit card loans in order to facilitate the estimation of the losses inherent in the portfolio as of the reporting
date. The Financial Services segment uses the scores of Fair Isaac Corporation (“FICO”), a widely-used tool for
assessing an individual’s credit rating, as the primary credit quality indicator. The FICO score is an indicator of
quality, with the risk of loss increasing as an individual’s FICO score decreases. During the second quarter of 2012,
the Financial Services segment incorporated a newer version of FICO that utilizes the same factors as the previous
scoring model, but is more sensitive to utilization of available credit, delinquencies considered serious and frequent,
and maintenance of various types of credit. Management of the Financial Services segment believes the newer
version will enable us to improve our risk management decisions. The credit card loan segment was disaggregated
into the following classes as reflected in the tables below based upon the loan’s current FICO score. The Financial
Services segment performed an analysis of the new FICO scores and the previous FICO scores to determine the
proper FICO score cuts for each loan class in order to maintain comparability of credit risk to 2011. As a result of
this analysis, as of June 30, 2012, the classes were changed from:
• 679 and below to 691 and below,
• 680 - 749 to 692 - 758, and
• 750 and above to 759 and above.
The Financial Services segment considers a loan to be delinquent if the minimum payment is not received
by the payment due date. The aging method is based on the number of completed billing cycles during which a
customer has failed to make a required payment.