The FICO Score is the most popular credit score among lenders, and as you may know, we all actually have three of them. They are based on our credit reports at the nation’s three largest credit bureaus – Experian, Equifax, and TransUnion. Depending on the lending institution and the type of loan you’re applying for, anywhere from one to all three of these scores may be used to make underwriting decisions. That’s what makes our inability to access Experian FICO scores so troubling.
That’s right, we as consumers can’t get our hands on Experian FICO Scores, despite the fact that they’re based on our financial data. Do you know why we can’t get them? Because the credit reporting and scoring system in the United States is flawed and riddled with conflicts of interest that enable credit bureaus to put their business agendas ahead of basic consumer rights, like accessing our own data, even for a fee.
You see, Experian, Equifax, and TransUnion once had a longstanding relationship with the Fair Isaac Corporation (i.e. FICO) that brought credit scores to the very people whose fiscal responsibility they reflect – consumers – through a program called myFICO. However, in 2009, Experian and FICO were unable to reach an agreement to extend this partnership. While it’s clear that this impasse resulted in a prohibition of the sale of Experian FICO scores, its underlying causes are decidedly less certain.
Experian publicly contends that the split came as a result of unreasonable demands on the part of FICO and that the development actually won’t prevent consumers from gauging their creditworthiness and properly managing their finances.
Industry insiders doubt that, however, believing that Experian’s decision to terminate its agreement with FICO was actually fueled by the company’s desire to replace the FICO score with its own credit score as well as bad blood lingering from a 2006 lawsuit brought by FICO against Experian, Equifax, and TransUnion. It’s obviously in FICO’s best interest to continue selling Experian-based scores, after all, and the split only served to devalue the FICO score while increasing the relevance of Experian’s own credit scores.
Experian itself lent credence to this theory with an open letter posted on the company’s website following the breakdown in negotiations with FICO.
“I want you to be aware that this change by no means eliminates your ability to assess your creditworthiness, including access to credit scores.” the letter read. “There is no one credit score that all financial institutions use to make decisions, and there is also no one credit score that consumers must use to help them understand and manage their credit.”
As much as Experian would like you to believe that its in-house score is just as helpful as the FICO score, the truth is that only the score used by one’s prospective lender truly matters. Credit scores differ, and by looking at the wrong one, you could be basing some very important, costly decisions on irrelevant information.
Regardless, Experian is clearly using consumers’ financial information as a bargaining chip of some sort, and identifying the root cause of the Experian-FICO divorce neither solves the problem of Experian FICO score inaccessibility, nor that of the troubling conflicts of interest that led to it. That’s a job the newly-formed Consumer Financial Protection Bureau is well-equipped to handle. Whether they eventually decide to do so or not is another story entirely.
There is the difference of night and day between the Experian 3 Plus Scores and the Fico Equifax and Transunion scoring process. Working off credit reports of the same date (7/28/12) its not just a matter of the plus score is at this time 33 points higher across the 3 bureaus which might be paletable. But the Equifax FICO score off the equifax credit report of the same date is 85 points lower than the plus score. Since most banks take the middle score among the three as their criteria for lending. I have been working with various lenders for 5 years to refinance my near FHA limit house I have been rebuilding from a 2007 fire while paying $43,000 per year in mortgage interest on an 8.8% loan 30 years fixed. At first I trusted the plus scores to reflect my true credit picture. I have done what has been suggested pay down the credit card debt, rebuilding my house left me, as I pay it down the banks reduce the limit and I still have a debt to available credit of 70%. I have screen shots to show the following should the new Consumer Financial Protection Bureau be interested in doing the job it was created for. as of 7/28/12. Experian Equifax Transunion. ======================================== plus 722 731 722. -85 points +33 points. FICO? 646 689. This is one place where Big Government needs to step in and fix the rober barron activities of big banks who do not operate in the countries interest or the consumers interest. If I had one of these low interest rate loans the administration keeps talking about I would have budget to complete the reconstruction of my home, but I don't qualify since I can afford to pay $43,000 in interest 5 years into the loan. I should pay it. Last christmas I wound up traveling for work, and putting $200 on a credit card that had, had a zero balance. My scores dropped enough in February to prevent me from going to closeing on a 4.25% refinance, alegidly because my credit card balance was headed the wrong way $200 up with a $18,000 balance owed. MyFico says match up the information producing a FICO report and the missing Experian report can be calculated with some degree of certainty. It can't be working, at least not with Equifax same data since Equifax plus scores are 9 points higher while FICO Equifax scores are 43 points lower. Making the differance between whether my mortgage costs me $43,000 a year in interest or $20,000 a year in interest. Bunyip48@aol.com
July 29, 2012 at 05:18am