- The Washington Times - Wednesday, January 17, 2001

Two companies are teaming up to make one of the most mysterious elements of the loan-approval process more accessible to consumers.

Fair, Isaac & Co. and Equifax said last week they will provide credit scores to borrowers over the Internet by the end of March at a yet-to-be-determined price. Until now, scores were available to lenders, employers, landlords, the credit-card industry and other financial services providers but not directly to consumers.

The credit score is a three-digit number determined by time lines of loan payments and other factors. Called a FICO (Fair, Isaac & Co.) score, the number, produced by a mathematical algorithm, is used by most lenders to determine whether borrowers are eligible for credit and at what interest rate.

Fair, Isaac & Co. has come under fire from consumer groups, lenders and legislators for not revealing the score directly to consumers. The San Rafael, Calif.-based firm said it prohibited the credit-reporting agencies, Equifax, Trans Union and Experian, from giving the numbers to borrowers for fear they would misinterpret or attempt to manipulate scores.

In August, the California Legislature passed a law requiring credit agencies to reveal scores, and in the fall Fair, Isaac & Co. announced it would do so nationwide. The agreement with Equifax is the first the company has announced with the agencies.

Consumer groups say giving borrowers their scores will allow them to better understand why they may be ineligible for credit, or to better prepare when applying for a loan by trying to boost their scores.

"We've seen the market demand grow for this," said Mike Cummins, corporate vice president and general manager of the consumer direct business unit at Equifax. "There's been an increasing empowerment of the consumer, the consumer has been more proactive and involved in credit decisions," he said.

He said his company, which provides credit reports to consumers for free if they are denied credit and otherwise for $8, has received a rising number of calls to its customer-service centers regarding credit scores.

Fair, Isaac & Co., which develops mathematical models for different industries, first came up with the credit-score model 40 years ago, said Craig Watts, a consumer affairs manager with the firm.

"Consumers really didn't become aware of their use by lenders until the mid-90s," when lenders such as Fannie Mae and Freddie Mac began to rely on them more heavily, he said.

Consumers will be able to purchase their credit report, credit score, top four reasons for the score and a FICO explanation guide on Equifax's Web site. They also will have a toll-free number to call for more information once the product offering is up and running.

Robert O'Toole, senior staff vice president for residential finance at the Mortgage Bankers Association of America, said the agreement will take some of the pressure off the lenders, who are frequently left to reveal credit scores to borrowers themselves.

"There remains a lot of uncertainty over the meaning of the credit score and consumers tend to want more detailed explanation from the lender," Mr. O'Toole said.

"[The agreement] removes the shroud a little bit," he added.

Mr. Watts said his company is in discussions with the other credit-reporting agencies to sign similar agreements.

Walter Rothschild, an executive vice president of marketing with Trans Union, said his agency is still weighing its options, including developing its own version of the score.

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