Fico score retail profit article...

Discussion in 'Credit Talk' started by marci, Jun 29, 2001.

  1. marci

    marci Well-Known Member

    Hi all,

    I got this from the Motley Fool website. I don't know the source of the article, though. No URL was given.


    Sites Selling Fico Scores Get 40 Million Hits
    By W.A. Lee
    American Banker , June 28, 2001

    In the 90 days after Equifax Inc. and Fair, Isaac & Co. first began making Fair, Isaac credit scores available, two Web sites where the scores are being sold got more than 40 million visits combined, a number that surprised the companies offering them and signaled the public's interest in monitoring information about their creditworthiness.

    Until March credit scores based on a model developed by Fair, Isaacâ?? called Fico scores â?? were sold to lenders but were not available to consumers unless they had been denied a loan.

    As the national debates over privacy and lending standards began escalating, lawmakers
    and consumer groups put pressure on Fair, Isaac and the credit bureaus to be more forthcoming.

    Fair, Isaac of San Rafael, Calif., and Equifax of Atlanta introduced an online product called Score Power, which delivers a consumer's Equifax credit report, Fico score, and Fair, Isaac's guide to the score for $12.95. The companies are using the three-month milestone to usher in another product, a subscription to Score Power that lets people view the same information four times a year for $38.85.

    But consumers may not have to pay for this information much longer. A new Californial law taking effect July 1 requires real estate lenders and mortgage brokers to disclose to consumers a credit score that was used to evaluate their loan application. E-Loan Inc., an online lending company in Dublin, Calif., that ran into trouble with Fair, Isaac last year for giving away the scores on its Web site, said Wednesday that it plans to start dispensing the scores again as soon as the law kicks in.

    Equifax and Fair, Isaac would not say how many of the 40 million visits to and produced a sale of Score Power, but Mike Bush, senior vice president and general manager of the consumer direct business at Equifax, said it was â??a good number.â?

    â??The consumer interest combined with the media interest in the product just created something that exceeded our expectations,â? Mr. Bush said. Cheri St. John, vice president and general manager of global alliances at Fair, Isaac, said traffic volumes have been driven by the media's strong interest in Score Power, which has been covered by â??Good Morning, America,â? â??Readers' Digest,â? and other high-profile outlets. â??I don't think the media would be interested if there wasn't general consumer interest out there,â? Ms. St. John said. Mr. Bush said: â??A credit score has been one of those deep secrets to consumers for years. Many didn't know what their Fico scores were or that they even existed.â?

    Ms. St. John agreed with Mr. Bush that the public's response had come as a surprise. â??Before we launched, we knew there had been media interest and consumer advocacy interest, but we asked, 'How many people do you think will actually pay $12.95 to get a copy of their score?' We had to respond that we really didn't know,â? she said. â??We tried to prepare for a high volume, but we were actually surprised that the demand was greater than expected.â? The companies would not say how many of the 40 million visits represented multiple ones by the same people, but Mr. Bush said: â??I can't imagine making lots of visits. The Equifax Web site isn't that interesting. You come to the site for a specific reason.â?

    Ms. St. John said the California law that mandates disclosure of credit scores does not require that the score be a Fico score or even the score on which the loan decision was ultimately based. In a telephone interview, Chris Larsen, chairman and chief executive officer of E-Loan called the law â??a step in the right directionâ? and said that credit scores should be like stock quotes: â??You can get them from just about anybody and for free.â? In February 2000, E-Loan briefly dispensed free Fico scores until the companies that fed its data cut it off, at Fair, Isaac's behest. Fair, Isaac said E-Loan behaved irresponsibly by not explaining the scores or accompanying them with an official credit report. â??It's a bogus accusation,â? said Mr. Larsen, who said E-Loan wants to see the mechanisms of credit scores thoroughly and publicly revealed. â??It's almost a philosophical difference. The bureaus think if consumers know how the scores are built, they will manipulate them. We think they won't manipulate them, they'll manage them.â?
  2. Pat

    Pat Well-Known Member

  3. Jim

    Jim Well-Known Member

    Thanks Marci,

    I have seen my "credit scores" at various times since March 1999 at...

    The Ford dealer - once
    Credit union - twice
    EQ Scorepower - once
    EX Creditexpert - twice
    E-loan - once

    What I am about to say is not fully scientific but I came to 2 conclusions:

    1. The E-loan is the least accurate and inflates your score by asking questions of consumers that are used to generate the score but are not used in real FICO scoring.

    2. The murderous effect on a credit score of having "hard credit inquiries" and "new credit" has been underestimated.

    Just my thoughts on an interesting article.
  4. Donna

    Donna Well-Known Member

    There is absolutely no doubt in my mind. Inquiries are a score killer!

    Currently, my score on Equifax is 675 and the top reason for the rating is number of inquiries.

    The second reason listed is too many new accounts. In January, I opened up two new creditcard accounts and, in April, I got a retail card. So, Believe me! Right now I'm *totally* on the wagon! I'm planning to try to stick it out for a year and then see what my score looks like. If it's improved, then there's one more card I'd like to get and I may try for it at that time.

    I realized that new accounts hurt your score but I had no idea that inquiries had such a negative impact. Yes, I knew too many weren't good but I'm surprised at how few it takes to bring down your score. Right now, I have about ten on Equifax and that's mainly because of Qspace. I'm wishing I had never heard of that service and I'm still trying to get their inquiries off my report.


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