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Experian FICO score may soon be off-limits to consumers

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See updated story: Consumers lose access to major credit score 

Come Feb. 14, consumers will likely lose access to their FICO scores from credit bureau Experian, even though lenders will continue to use that score to make decisions about whether to extend credit.   

credit score

Experian is one of the three major credit bureaus that keep massive databases recording how individuals and businesses handle credit. Fair Isaac Corp. is the company that invented the widely used FICO score, which uses a complex formula to take the credit bureaus' data and distill it into three digits.

For six years, through a deal between the two companies, consumers could purchase the FICO score based on Experian's data, judge their creditworthiness and take steps to improve their scores.

On Feb. 4, Fair Isaac revealed that Experian intends to pull the plug on the deal.

However, Experian has extended the contract allowing Fair Isaac to sell Experian FICO scores to lenders. So while lenders will continue to use FICO scores based on Experian data, consumers won't see the information lenders have in making lending decisions. "In effect, this means that consumers will no longer be able to see or manage the FICO scores that Experian is selling to lenders," FICO's announcement says. As for why Experian would allow the score to be made available to lenders but not borrowers, "That's certainly confusing for us as well," says Shon Dellinger, vice president of MyFico.com.

Experian offers alternatives
Experian says the decision doesn't mean borrowers will no longer have options -- they can buy the credit scores that Experian creates, although few lenders look at Experian-generated scores in making decisions. "While this commercial agreement with myFICO.com is not strategic to Experian's overall business, we value the need for consumers to understand their credit reports and credit scores," Experian said in an e-mailed statement. "Consumers will continue to have many choices for obtaining credit scores based on Experian data, including from Experian websites and our many resellers. Consumers can also assess their creditworthiness by purchasing credit scores developed by other credit reporting agencies or third parties, or FICO scores based on other bureaus' credit data."

Fair Isaac says that could prove problematic for borrowers. "We were really surprised by the decision," says Dellinger, noting that the timing of this decision is especially bad for potential borrowers. Amid the ongoing credit crunch, "consumers really need insight into the scores that lenders are using" to make decisions, he says. That includes scores based on Experian data.

Though Fair Isaac expressed surprise at the decision, it's not the first time the two companies have been at odds. In 2006, Fair Isaac sued the three credit bureaus over their introduction of VantageScore, a proprietary credit-scoring model that Fair Isaac alleges harmed the FICO brand. The suit against Equifax was dropped in June 2008 but remains pending with regards to Experian and TransUnion.  

We were really surprised by the decision.

--Shon Dellinger    
VP, MyFICO.com   

Move had been threatened previously
This isn't even the first time Experian has threatened to yank Fair Isaac's ability to supply scores based on its data. The credit bureau made a similar announcement several years ago but never followed through, according to Fair Isaac.

Whether Experian follows through this time remains to be seen. Fair Isaac officials say they hope it doesn't, but they're making sure they alert their customers nonetheless. The decision could impact three FICO products -- FICO Credit Complete, which would be discontinued, as well as Suze Orman's FICO Kit and FICO Standard, which would still provide those FICO scores using data from Equifax and TransUnion.* All three of those products currently include the Experian-based score. As for consumers, "we would make sure that they are not charged for any services that cannot be provided," Dellinger says, including annual renewal of FICO Credit Complete.

If the access is cut off, it represents a reversal to the trend toward increasing consumers' access to the data on which lenders base lending decisions. Less than a decade ago, consumers were barred from seeing their credit scores.

Some small exceptions
Even if Experian does follow through with its plans, a very select group of consumers would continue to see their Experian-based FICO scores. Fair Isaac says that on a monthly basis, customers of the Pennsylvania State Employees Credit Union will continue to have access to the same Experian FICO scores the lender is using, thanks to a deal the credit union had previously established with Experian. (Other lenders, including Washington Mutual and HSBC, have similar programs with other credit bureaus but not with Experian.) Additionally, customers who are rejected for mortgages based on their lowest FICO scores will be able to see the score used in that decision, which in some cases could be the Experian-based score.

Fair Isaac doesn't see much benefit in that arrangement. "That's learning about it at the wrong end of the decision process," says Craig Watts, Fair Isaac's public relations director.

See related: Credit score estimator, Fed report: Banks continue to tighten lending standards, More Americans get free FICO scores 

* -- The story as originally published misstated the number of FICO products that could be discontinued. Corrections policy 

Updated: February 5, 2009


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