July 31, 2008
by Edward Jamison, Esq.
If you've been following the financial news over the past couple of weeks, chances are you've heard about the CompuCredit lawsuit and the potential impact on credit scores.
On June 10th, the Federal Trade Commission filed a lawsuit against CompuCredit, for the deceptive marketing of their Aspire Visa card to sub-prime borrowers. According to the lawsuit disclosures, CompuCredit was penalizing their customers for using their Aspire Visa cards with certain merchants.
A few examples that were given were massage parlors, bars, tire companies and even marriage counselors.
They were using a scoring model that helped to predict their customers' risk based on where they shopped. How in the world does buying tires or going to marriage counseling impact credit scores?
You can imagine the frenzy this piece of information is causing. Furious consumers and media outlets were demanding to know why "where" you shopped could negatively impact your FICO scores. Well, therein lies the problem... unfortunately, the media lumped these scores with FICO scores and simply put - these aren't FICO scores, folks.
This caused an awful lot of confusion and in an effort to set the record straight, here's some additional context that should help shed some light on this touchy subject:
Click Here to Read On...
Showing posts with label Credit Scores. Show all posts
Showing posts with label Credit Scores. Show all posts
Thursday, July 31, 2008
Tuesday, July 29, 2008
FICO or FAKO?
July 24, 2008
by Edward Jamison, Esq.
We’ve all seen them – the never-ending television ads and radio commercials with the catchy jingle for free credit reports and scores.
Nowadays a number of similar companies are offering free credit reports and scores. With all of these ads for freebies, it’s no wonder that so many consumers believe that all credit scores are created equally.
First, a little history on credit scores:
A company called the Fair Isaac Corporation created the first credit score. It was made available to lenders in the very late ‘80s and soon thereafter began to pick up momentum and popularity in the lending world. The FICO® score became the gold standard in the mortgage lending world when Fannie Mae and Freddie Mac endorsed its use for evaluating mortgage loan applications in the mid ‘90s.
For years the FICO score was a mystery to consumers and was only known by the lending industry. Credit scores have only recently been made available to the public in the last few years. In 2001, California passed a law that required credit scores to be made available to California residents. This pretty much opened the floodgates for the rest of us.
It also turned into a cash cow for the bureaus. However, for two of the three, instead of selling the actual FICO score, where they had to pay royalties to the Fair Isaac Corporation – they created their own scores to sell to consumers.
That’s where the confusion started.
Now that the bureaus all sell scores targeted at the consumer market, many unknowing consumers assume that these scores are the same scores a lender would see. Unfortunately, this is just not the case and it often causes a lot of confusion for those that are looking to refinance a mortgage or trying to qualify for a new car loan.
So what score is the right score and where can I find it online?
Click Here to Read On...
by Edward Jamison, Esq.
We’ve all seen them – the never-ending television ads and radio commercials with the catchy jingle for free credit reports and scores.
Nowadays a number of similar companies are offering free credit reports and scores. With all of these ads for freebies, it’s no wonder that so many consumers believe that all credit scores are created equally.
First, a little history on credit scores:
A company called the Fair Isaac Corporation created the first credit score. It was made available to lenders in the very late ‘80s and soon thereafter began to pick up momentum and popularity in the lending world. The FICO® score became the gold standard in the mortgage lending world when Fannie Mae and Freddie Mac endorsed its use for evaluating mortgage loan applications in the mid ‘90s.
For years the FICO score was a mystery to consumers and was only known by the lending industry. Credit scores have only recently been made available to the public in the last few years. In 2001, California passed a law that required credit scores to be made available to California residents. This pretty much opened the floodgates for the rest of us.
It also turned into a cash cow for the bureaus. However, for two of the three, instead of selling the actual FICO score, where they had to pay royalties to the Fair Isaac Corporation – they created their own scores to sell to consumers.
That’s where the confusion started.
Now that the bureaus all sell scores targeted at the consumer market, many unknowing consumers assume that these scores are the same scores a lender would see. Unfortunately, this is just not the case and it often causes a lot of confusion for those that are looking to refinance a mortgage or trying to qualify for a new car loan.
So what score is the right score and where can I find it online?
Click Here to Read On...
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