SCORE A BIG win for homebuyers, mortgage applicants and other borrowers: After years of prohibiting consumers from seeing their critically important credit scores, the developer of the scores has now done an abrupt about-face.
Starting sometime next month, mortgage applicants will be able not only to obtain their so-called "FICO" scores from their loan officers, but also to go online to find out what specific factors in their credit profiles are affecting their scores.
Fair, Isaac and Co., the company that created the FICO scores used by virtually all major mortgage lenders to evaluate the creditworthiness of applicants, says it wants to "demystify" its controversial scoring process.
The company has been under siege by critics for refusing to allow consumers to obtain their scores. FICO scores can be particularly important to home mortgage borrowers because many lenders use them to accept or reject applications, and to set rates and fees.
FICO scores run from the 300s to above 900, and are generated through complex statistical models created by the company based on computer analyses of millions of consumers' credit histories. For years the company has prohibited lenders from releasing individual scores. Fair, Isaac's rationale has been that the scores by themselves are potentially confusing to ordinary consumers.
Though the online "score explanation service" won't be operational until mid to late July, Fair, Isaac already has opened up its heretofore tightly shut "black box" to the general public. On June 8, it posted for the first time ever on its Web site (www.fairisaac.com) details of the numerical weightings assigned to different credit-history factors used to develop FICO scores. For example, according to the Web site:
* 35 percent of your score is determined by the payment histories on your credit accounts, from Visa cards to department store and car loans. The model assigns greater weight to recent missed payments than late payments years ago.
* 30 percent of your FICO score is based on the amounts you owe creditors. This includes the total of what you owe on all your accounts, and whether you carry an unpaid balance on certain accounts like credit cards. Interestingly, the statistical model sometimes gives slightly higher scores to people who show an unpaid balance on a credit card, with no late payments, than to those who run no balances.
