Amid rising criticism of its credit scoring system, Fair, Isaac & Co. has set up a Web site that, for $8, offers interpretations of credit scores and explanations of how they were derived.

The catch is that consumers must know their scores in order to use the service and for the moment the only way people can get them is after they have been denied a loan, when a credit bureau will supply them. Until this changes, Fair, Isaac expects the Web site to appeal primarily to lenders and brokers.

The company says it is working with the credit bureaus to let people get their scores directly from the bureaus or from Fair, Isaac, but this is iffy. Fair, Isaac in San Rafael, Calif., does not compute Fico scores itself but provides the formula that credit bureaus use to calculate them.

The Web service comes on the heels of federal legislation introduced in September that would require lenders to make credit scores and explanations available to consumers as well as of rising criticism that the scoring system is arcane and unfair.

Without the online guide, people who obtain their scores and the "reason codes" that go with them have practically no way to put the scores in context or find out what they mean.

Fair, Isaac calls its guide an important tool for consumer education, not a gesture to appease Capitol Hill. "Consumers have a right to understand their credit rating and what behaviors affect the Fico score," said Tom Grudnowski, president and chief executive officer of Fair, Isaac.

The guide, introduced last month, lets people type in their scores - typically a number between 300 and 850 - and find out the percentile into which it falls on a national spectrum of consumer credit risk.

The guide also gives details about how lenders would view the score and explains the factors that have influenced it (the "reason codes"). The consumer might learn, for instance, that she won points for holding numerous accounts for a long time but lost points for carrying balances in too many accounts.

Fair, Isaac's scoring system has come under fire on several fronts.

Franklin D. Raines, chairman and chief executive officer of Fannie Mae, called the system "opaque," a criticism that Fair, Isaac is apparently hoping to deflect with the new service.

A banking industry analyst at GartnerGroup Inc. of Stamford, Conn., said that people who shop for rates on the Internet are unfairly penalized since they amass a large number of "inquiries" from potential creditors and this reduces their scores.

Fair, Isaac said people who rate-shop shortly before taking out a loan usually do not have their scores reduced and, either way, racking up inquiries does not have a big effect on scores.

The scores are based on a formula introduced by Fair, Isaac more than 10 years ago and adopted as a standard by mortgage and consumer lenders. Credit scoring is complex - some call it "pseudoscience" - and over the years consumer advocates have said the scores are too abstract for people to understand.

Michael Rapaport, a senior vice president at Fair, Isaac who was in charge of developing the online guide, said, "We're actually hoping that the service will reduce the number of calls we get from consumers and brokers who today have no recourse for clear explanations."

Though the analysis is addressed directly to the consumer ("compared to the national population, you are in the 30th percentile of consumers by credit risk"), the guide is expected to be used primarily by lenders and brokers. Fair, Isaac says lenders and brokers can use the guide "on behalf of consumers," but some speculate that lenders will use the service to assess rather than help consumers.

Mr. Rapaport said that people who inquire about their scores most likely are already dealing with a broker. "Typically, we found that most consumers - if they're interested - are in the context of some lending position," he said.

People who visit www.ficoguide.com must enter a Social Security number, a credit card number (to pay for the service), and a credit score. The analysis includes bar graphs and charts that show how the score measures up among the whole population and what it tells creditors about the possibility of delinquency.

The length of each analysis depends on a person's credit history, but the sample posted on the Web site is roughly four pages long and lists Equifax Inc. as its source.

The analysis offers customized advice in plain language. For example, if one factor contributing to a low score is "Reason Code #8: Too many inquiries last 12 months," the guide states that people who frequently try to open new accounts are considered riskier borrowers. "Only apply for needed credit, and wait before you apply for more," the guide advises.

Consumer groups say the service is a step in the right direction.

Marianne Gray, president of the Consumer Credit Counseling Service of Fort Worth, called the guide "a good faith effort" by Fair, Isaac to disclose information to consumers and help them understand it.

However, it would be impossible to explain everything about Fico because of the scoring model's complexity, she said. "Clearly, they're not going to disclose every single factor they've scored," she said, "because then they'd no longer have a model to sell."

But Ms. Gray, whose agency counsels 13,000 families that are following debt management plans, said she worries that the guide might turn into "a supplemental product for creditors" to sell to hapless debtors.

"My initial perception was that … creditors would access this information and then reformat it on their own letterhead - without the graphic - and that's what they were paying their $8 for," she said. "A credit report in itself is confusing to the reader. And once you throw in some intangible score, you've lost them even more."

Avivah Litan, an e-commerce analyst at GartnerGroup, said she was skeptical about Fair, Isaac's motives. "I think they're just trying to get the regulators off their backs. Otherwise, it's not in their interest to do this."

Companies that disclose too much credit scoring information will be deluged by angry telephone calls, Ms. Litan said. "It's like opening a hornet's nest. You get calls from people who say, 'Explain to me why you gave me a three when I pay my bills on time.' "

Mr. Rapaport said that people should routinely get copies of their credit reports, to make sure the information is correct. Fico scores alone do not make or break a person's creditworthiness, as a credit report can, he said.

Next year Trans Union Corp. plans to start a scoring service designed to help consumers assess their creditworthiness. "We were the first ones to say that we were going to do it," said Clark Walter, a spokesman for the Chicago credit bureau.

The Trans Union service is to differ in content and purpose from the Fico guide, Mr. Walter said. The former will be designed expressly for consumer use and will be available by Internet or on paper, he said, whereas the Fair, Isaac service is strictly Web-based and is primarily for lenders.

Though Fair, Isaac and other companies are working to develop such a service, the project has no official timeline, Mr. Rapaport said. "We want to see this done correctly. What we fear is that some of the regulation proposals would actually make it unclear to the consumer. If we can take the steps to do it correctly, we won't need the legislation to tell us how to do it."



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