Credit bureau move creates 'secret' scores

By Liz Pulliam Weston

Experian wants to keep you in the dark.

There's really no other way to characterize the credit bureau's decision to stop selling FICO credit scores to individuals as of Feb. 14. Experian pulled out of its agreement with myFICO.com, which had been the only place where consumers could buy their FICO scores from all three bureaus.

Experian will continue to sell FICOs to lenders. That's big business, because the FICO is the leading credit scoring formula and the one used by most lenders.

But to consumers, Experian is pretending the FICO is no big deal.

"There is no one credit score that all financial institutions use to make decisions, and there is also no one credit score that consumers must use to help them understand and manage their credit," Experian spokeswoman Susan Hensen wrote me in an e-mail. "There are many reputable credit scores on the market that consumers can use to evaluate their creditworthiness before making financial decisions."

• Talk back: Are we getting ripped off? Should Congress take action?

Experian has been reciting this line for years. When consumers buy credit scores directly from Experian, they're sold what the bureau calls "educational" scores, Experian's PLUS or the VantageScore, a formula cooked up with the other two major bureaus that's gone over like a lead balloon with lenders.

So many consumers have been fooled by this gambit, thinking they're getting FICOs when they're not, that some consumer advocates refer to these other credit scores as "FAKO scores."

Why a FICO matters most

Experian's position is that a credit score is a credit score. But these non-FICOs have consequences:

• Mortgage brokers and other lending professionals have long complained -- even before the VantageScore was introduced -- that the bureaus' educational scores are often 30 to 100 points higher than consumers' FICO scores.

• The VantageScore's scale is so different from FICO's -- 501 to 990, compared with FICO's 300 to 850 -- that the same number means vastly different things. A 760 would be an excellent FICO score, for example, but a mediocre rating on VantageScore.

• The result is that would-be borrowers who bought something other than a FICO may think they're in a position to get a great rate, when they might not have a high enough score to get any loan.

Mortgages are also a prime example of why you need to see all three of your FICO scores, not just the two that are still available at myFICO.com.

That's because mortgage lenders typically pull all three of your FICO scores and use the middle one to determine your interest rate. If your FICO scores are 740 from Experian, 680 from TransUnion and 715 from Equifax, for example, most lenders will use the 715 score to set your rate.

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If one of those scores is missing, you have no way of knowing what your middle score is or what rate you deserve. You're walking blind into one of the most important financial transactions of your life.

That's just scary.

No right to face your accuser?

In this particular case, consumers are the grass being trampled in a fight among the elephants: one of the credit bureaus and Fair Isaac, the company that created the FICO formula.

Experian Executive Vice President Peg Smith said the bureau didn't set out to cut consumers off from their FICO scores and in fact wanted to expand access to the scores by selling FICOs from Experian.com, something its agreement with Fair Isaac hadn't allowed.

But the terms of the new contract Fair Isaac proposed were "so unreasonable," Smith said, that Experian ended negotiations and decided to rethink its relationship with the scoring formula provider.

• Video: What Experian's pullout means

"This was never intended to disenfranchise consumers," Smith said. "They've been caught in the middle."

But what led to Experian's move isn't as important is that it happened.

And I say: Enough already. It's time that we stopped allowing our personal data to be seen solely as a profit center for big, faceless corporations. Your access to the information that's critical to your financial life shouldn't be left to the whims of credit bureaus or lenders or anyone else.

If anyone uses a score to evaluate you -- any score -- you should have the right to see that score and challenge the data that go into creating it.

Continued: 2 important secret scores

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