Easy Internet credit-score access shut down
By Pat Curry • Bankrate.com

April 14, 2000 -- Just weeks after a service opened that needed only a few mouse clicks for you to find your credit score, it has been shut down.

Internet lender E-LOAN broke new ground in February when it announced it would offer consumers direct access to their credit score, a major factor used by lenders in deciding everything from mortgage rates to credit cards and car insurance.

But despite strong response from consumers, E-LOAN announced it had axed the free service on April 7.

At the root of the decision to pull the service was a contract between credit bureaus and the score's manufacturer, California-based Fair, Isaac and Co. Inc., that forbids giving consumers the scores unless they're applying for credit.

Fair, Isaac is the maker of the trademarked credit-risk model that produces what is commonly called a FICO score. The three major credit reporting agencies -- Equifax, Trans Union and Experian -- use the score, which distills the information in a credit report into one number that most lenders look at very carefully on a credit application.

The credit reporting agencies have contracts with distributors who provide the information to lenders.

Limited access
Until E-LOAN began releasing credit scores as part of its My E-Loan service, the only way consumers could see the score was if they were applying for credit and the lender was inclined to show it them. If a consumer gets a copy of his own credit report, the score is not included.

In a Federal Trade Commission hearing on the topic last summer, some consumers testified they never even knew they had a credit score or the role that the score plays in credit approval.

E-LOAN obtained the credit scores from one of its distributors, Credit Info Net, said E-LOAN Senior Vice President Cameron King.

"Fair, Isaac said to the credit agencies, 'You're in violation of our contract; you have to stop this, ' " King said. "It started with Equifax. They cut off the entire pipeline to Credit Info Net and shut us down for a short time. We moved over to another pipe. Then it started with TransUnion. Credit Info Net was getting screwed, so we've removed it from the site.

"It's time for other people to fight the good fight. By the time we turned it off, we had 14,000 accounts. It was a great service -- consumers liked it. The e-mail was 100 percent positive. This was something consumers want."

It's yours -- with conditions
Fair, Isaac spokesman Craig Watts said the company has no objection to disclosure of the score, but only if the consumer can get a sufficient explanation of what the score means, which they say only happens within the context of a lending decision. E-LOAN's list of qualifiers on the site was well done, he said, but didn't meet the terms of the contract.

"Our point of view is consumers need more information and individual counsel from a lender if they truly want to understand their credit standing and how to improve it in the eyes of the lender," Watts said. "The score by itself isn't that important ... The contracts that Fair, Isaac have had for 10 years with the three credit bureaus have prohibited the release outside the context of a lender's explanation of a credit decision. As long as the disclosure takes place in that context, the disclosure is fine."

One of the problems in the current discussion around disclosing scores, Watts said, is that credit scoring models were designed for lenders who already are experienced in the kinds of information and decisions lenders need to consider.

"They were not designed for consumers who have little experience in borrowing money and even less experience in understanding what makes or breaks a lender's decision," he said. "They generally don't have much awareness of the policies that need to be in place for credit decisions. Lenders do."

E-Loan's King vehemently disagrees.

"If that were true, every time you were turned down for a score, people would explain that to you," he said. "I don't buy that. It's not Fair, Isaac's decision. The score was from my information. I should be able to see that. I'm not sure I totally understand how SAT scores work, but if you applied to a college and were denied because of the score, I can't imagine they wouldn't show it to you or discuss it with you."

Meaningless numbers without context?
Fair, Isaacs also believes that consumers who get the score without the benefit of an explanation are apt to make incorrect assumptions about it and, if they don't like what they see, take action to quickly improve it.

"Credit scores evaluate a consumer's credit history so short-term efforts are just as likely to hurt their score and their standing as it will to help it," he said.

One mortgage lender said he thinks Fair, Isaac's response is an overreaction.

"E-LOAN did an adequate job of explaining it," said Eric Cunliffe, COO of HomeSpace, a Colorado-based real estate, mortgage and home services provider.

"The issues Fair, Isaac seems to be frightened of is if it's generally released to the public, they'll (the public) find out ways to make their credit look better than it actually is. If they (Fair, Isaac) are worried that people will go in and manipulate the score, then it's not a very good score anyway."

The right to know
HomeSpace has given borrowers their FICO scores for years as part of the loan approval process, Cunliffe said. A proponent of credit scoring for its ability to speed up the loan approval process and to minimize the chance of discrimination, he said the scores carry enough weight that customers deserve to see them.

"If someone's going to measure me and I'm going to get approved or denied, I should know what, how and why my life is impacted," he said. "It's the new millennium and public information is public information. We're always saying in the industry that getting a mortgage should be as easy as getting a car.

"You go into a dealership and in an hour, you're approved and you drive off with it. We've got them going through an excruciating process for a piece of property that's not going anywhere and has enormous security. This is archaic. We took a giant leap forward in establishing a methodology of determining risk quickly, but ... if it comes at the price of people getting bad pricing and they don't know why, we've got a problem."

Pat Curry is a freelance writer based in Georgia