Web site sells direct access to credit scores

March 29, 2004

Fair Isaac takes new direction with myFICO Web site

By Samantha Peterson
Inman News

Jennifer Hopkins, a resident of Brentwood, Calif., sat in front of her computer earlier this month and checked her credit score as a way to prepare for buying a house in the next few years with her fiancé, Ken Fowler.

The credit score check was quick and was something she'd done occasionally over the past 18 months.

Her seemingly simple transaction reveals just how far Fair Isaac Corp. has come since the days when it actively fought any attempts to release consumers' scores to them. The company that developed the standard measure of credit risk, the FICO score, and once guarded it with a great deal of secrecy, now encourages consumers to access their credit scores directly at its own consumer Web site, www.myFICO.com.

With Internet access and a credit card, consumers can find out their credit score within minutes. The FICO score is used to make more than 10 billion credit decisions each year, including 80 percent of mortgage loan originations, according to the company.

Consumers also can use the myFICO Web site to learn how to improve their scores and find out what effect their scores really have on their chance of securing a mortgage or other type of loan. That was a feature Hopkins, as a hopeful home buyer, especially liked.

"They're not interested in the score in and of itself. They're interested in the score for a loan. Not the loan in and of itself, but to get a house," said Andy Jolls, VP of marketing for myFICO. "We know the end game and how it works."

Listen to Jolls talk about myFICO

The company wants real estate agents to encourage their clients to check their scores on the Web site. Jolls said myFICO is just starting to get the word out to agents.

"This is such a great tool for Realtors to make their clients aware of," Jolls said.

When myFICO opened for business, consumers could access just one credit report and FICO score from one of the three credit bureaus, Experian, Equifax or TransUnion. Now they still have that option, but they also can get all three reports and scores, which sometimes differ among the three bureaus, Jolls said. That option is exclusive to myFICO, he said.

Consumers then can use the myFICO Web site to "improve, use and protect" their scores, according to the company. Tools include a score simulator that analyzes the effect of such changes as paying off a credit card on the consumer's score. Consumers can also download information about five facets of credit scoring: payment history, amounts owed, credit history length, new credit inquiries and types of credit used.

Prospective home buyers also can find out how their score would translate into an interest rate and loan amount they'd likely be approved to obtain. The Loan Center, launched in February, allows consumers to compare national and local lenders' rates currently being offered to people in their area who have FICO credit scores similar to their own.

"What consumers are interested in is 'what does my score convert to in terms of my ability to borrow?'" Jolls said.

After the Web site's initial launch three years ago, the company found most people using it were in the market for a large purchase such as a house or car. Others had never checked their score and were simply curious. Some didn't even know such a score existed, he said.

Jolls said myFICO plans to conduct more consumer testing to find out whether that still holds true of people using the Web site today.

Beth Givens, director of Privacy Rights Clearinghouse, a nonprofit consumer advocacy group, encourages people to obtain their own credit reports and scores. Consumers having access to those scores is "a total shift," she said.

Givens credits Chris Larsen, CEO of E-Loan, for giving consumers their own confidential FICO scores in 2001. E-Loan's exposure of credit scores upset Fair Isaac, but helped lead to state and national laws that give consumers rights to obtain their own credit scores. The credit industry also came around to the idea on its own when it realized it was in its own best interest to release the scores, she added.

"More consumers have become aware of its importance, and the fact that they might be able to do something about improving their score," Givens said.

That means more potential customers for myFICO. Jolls wouldn't specify exactly how many people have used myFICO, but he said more than 1 million have used it since its debut.

"The concern was that by making scores available to consumers, they would try to learn how to game the score, but that's not happening," Jolls said. "They're actually becoming better educated on myFICO, improving scores and becoming better credit risks."

Now, Jolls said, Fair Isaac sees myFICO as a way not only to empower consumers with their own information, but also to help the companies that have been Fair Isaac's bread and butter–lenders.

"If we can actually make borrowers less likely to default and better credit risks, we're helping (lenders) in their business," Jolls said

Copyright: Inman News Features

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