FICO, formerly Fair Isaac Credit Organization, sells both credit scores andrnscoring software to lending institutions and in recent years has made scoresrnavailable to individuals for a fee.  Thernscores are currently available on the company website for $16.95 but there arernsubscriptions and other ways of obtaining the score at different price levels.  Mellody Hobson, Executive Vice President ofrnAriel Investments said on CBS’s ThisrnMorning on Tuesday that these consumer fees represent only 5 percent ofrnFICO’s income.</p

Credit scores are offered by other companies as well, principally the threernmajor credit reporting bureaus TransUnion, Experian, and Equifax although FICOrnclaims on its website to have a 90 percent market share. Each uses arnproprietary formula to calculate a numerical expression of an individuals’rncredit characteristics including payment history, outstanding debt, availablerncredit, and types of credit.  The scoresrnoffered by the three bureaus are more consumer education- focused than tailoredrnfor lender use.</p

While FICO scores are designed to give lenders an indication of how likelyrnan individual is to repay a debt the scores can also be helpful to consumersrnwho can use them to determine whether an interest rate offered them reflectsrntheir credit worthiness.  Since FICOrnscores include references to factors which may have negatively impacted a score,rnconsumers can also plan how to most efficiently upgrade their ability tornqualify for affordable credit.  </p

For years the credit reporting bureaus made is extremely difficult forrnconsumers to access their own credit history and most people had never heard ofrna credit score.  Various moves by thernFederal Trade Commission, financial regulatory agencies, and finally the Dodd-FrankrnWall Street Reform and Consumer Protection Act increased transparency andrnrequired each reporting bureau to provide yearly free credit reports butrnscores, because of their proprietary nature were more difficult to get and thenrnonly at a fee.  Under Open Accessrncustomers will still have to pay a fee if they go directly to FICO or thernreporting bureaus but not if they are customers of a participating lender.  </p

There has been no word from the other bureaus whether they will followrnFICO’s lead or continue charging for their scores which they aggressively marketrnalong with credit monitoring and identity fraud protection.   Equifaxrnhas a temporary agreement with Wells Fargo Bank similar to that of Open Access butrnit is unclear if it will extend beyond this year. </p

Hobson said FICO is making this move to increase its brand identity in thernface of competition from the bureaus. rnWhile Kleenex and Xerox have employed dozens of lawyers to prevent theirrnbrand names from becoming generic substitutes for “tissues” and “photocopying,”rnshe said FICO would very much like to make its name synonymous with “creditrnscore.” 

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