Credit score secrets unveiled? - law change would allow people to see their credit worthiness score - Brief Article

Black Enterprise, March, 2001

Congress may force bureaus to further inform consumers

If your plans to obtain lending for a mortgage have ever gone awry, it may have been because your FICO score, named after developers Fair, Isaac and Co. The three-digit number is produced by credit reporting agencies and provided to lenders to assess loan applicants' credit worthiness. Until recently, most consumers didn't have a clue the score existed or the critical role it plays in their ability to obtain credit, as well as the payment terms, because scores were kept under wraps. However, a recent California ruling requires credit bureaus to provide consumers with access to these scores and it's expected that Congress will follow suit with a nationwide mandate.

"The revelation of the credit scores and how they are compiled is something that consumers can use to better manage their debt and earn much more favorable terms when applying for loans," says Greg McBride, a financial analyst at Bankrate.com. Should the mandate pass, consumers could attempt to actively manage some of the factors--such as payment history, the number of available credit lines, number of recent credit inquiries, as well as the types of credit in use--that contribute to the statistical model that formulates the score. The higher the number, the more favorably lenders view your application. Still Craig Watts, Fair, Isaac and Co.'s consumer affairs manager, doesn't believe it will do consumers any good to know their scores without putting them into me proper context. He says, "Knowing the score is a good barometer and may help people manage their credit, but it's still not a guarantee that someone's going to get a loan or even the best rate."