Debate Over “Secret” Credit Scores Intensifies

On Valentine’s Day, Experian unceremoniously changed their business model. The company decided that they would no longer allow individuals to see their Experian credit score. They will no longer sell their information to www.myfico.com, which had been the only place that individuals could see how each of the three credit scoring companies rated them. Instead, they would only sell this information to potential lenders who are considering an applicant for a loan.

The company’s stance is that this move is not a big deal. A spokesperson for Experian stated that, “There is no one credit score that all financial institutions use to make decisions…There are many reputable credit scores on the market that consumers can use to evaluate their creditworthiness before making financial decisions.” They are right to an extent-it’s still very easy for a consumer to see how they’re doing generally when it comes to their credit score.

Opponents of the move, however, claim that it will put borrowers at a disadvantage heading into loan negotiations because they won’t have access to all of the information that the lender can see. This is especially important in mortgages, where the interest rate is usually calculated from the middle of a consumer’s three credit scores. Now, a consumer only can know two of those scores heading into a negotiation, making it impossible to know whether or not they are being treated fairly by the lender. In a financial world sorely lacking in trust, it’s a very big deal that this is happening right now.

Experian is directing the blame for this decision to Fair Isaac, the company that created the formula that we know today as our FICO score. Experian claims that in contract renewal negotiations, Fair Isaac presented them with terms and conditions that were unreasonable, so they essentially had no choice in the matter.

Legally, credit bureaus have been required to provide credit scores to inquiring consumers at a reasonable charge. However, the law has no stipulation that the information provided to lenders is the same that is provided to consumers. The reality today is that factors in your credit history can be used against you when you don’t even know they exist! Until the playing field is considered even again, this is a debate that will rage on and could have a big impact on any borrowing you plan to do in the future.

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