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Experian's FICO score will go only to lenders

The credit bureau will stop selling its version of Fair Isaac's number to consumers, a disadvantage to borrowers.

By KARA McGUIRE, Star Tribune

Last update: February 4, 2009 - 9:04 PM

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At a time when tighter standards are locking some consumers out of loans, a credit score used by some lenders to decide who's a worthy borrower no longer will be available to consumers.

Minneapolis-based Fair Isaac announced Wednesday that as of Feb. 14, the credit bureau Experian will stop offering its version of the FICO score through Fair Isaac's consumer website myFICO.com. However, Experian still will offer FICO scores to lenders, meaning that lenders can continue to use the score to make credit decisions, but consumers will have no way to see their scores before applying for credit.

"Overall, this is just a bad decision for consumers, and we hope that Experian will reconsider," said Shon Dellinger, head of Myfico.com. Dellinger would not say what effect this will have on Fair Isaac's revenue, which was down 14 percent in its first fiscal 2009 quarter compared with the same period a year ago.

Credit scores weren't always available for consumers to purchase and Fair Isaac used to say little about how its credit scores were calculated. In response to consumer demand in recent years, the company increased its consumer education efforts and now sells credit scores on its website.

"We're eliminating one of the three core scores that lenders are using, and now any lender who uses a FICO score from Experian is going to once again have the upper hand over the consumer," said John Ulzheimer, president of consumer education for Credit.com.

Because credit report data vary from credit bureau to credit bureau, three separate FICO scores are calculated from each bureau's data. FICO credit scores using TransUnion and Equifax still will be available through myFICO.com and some consumers won't notice Experian's absence.

But consumers who know their banks use Experian, and want to pay the $15 or so to check their scores before applying for loans, no longer will be able to do so. Checking your credit score beforehand ensures you won't be blindsided by a poor score that qualifies you only for a high interest-rate loan, or no loan at all.

The top 25 auto lenders and credit card issuers use some version of the FICO score to make lending decisions, as do 90 of the top 100 U.S. financial institutions. It's common for mortgage originators to pull all three FICO scores and average them to help determine a consumer's interest rate. It's unclear how many lenders use the Experian FICO score and for what types of loans.

Consumers can still buy Experian's own credit score and the VantageScore created by the three credit bureaus as a competitor to the FICO score through Experian. But those scores aren't as widely used by lenders as the FICO score and could mislead consumers about their credit health.

In a statement, Experian did not say why the company has decided to stop offering the FICO score to consumers and directed consumers to scoring products available at Experian.com. One theory: In a climate where financial services-related companies are looking for ways to increase revenue, "selling their own scores through their own consumer-direct Internet portals provides an increased revenue opportunity," said Tower Group analyst Craig Focardi.

It's also no secret that the relationship between Fair Isaac and Experian has been strained. In 2006, Fair Isaac sued VantageScore and the three bureaus, claiming that VantageScore violated antitrust laws. The suit is making its way through federal court in Minneapolis. Equifax was dropped from the suit late last year.

Kara McGuire • 612-673-7293

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