Fair, Isaac & Co.'s credit scoring system, on which banks have relied for more than a decade in evaluating consumer creditworthiness, is under attack on several fronts, and the company may be compelled to change the way it evaluates people.

In a speech last month Franklin D. Raines, chairman and chief executive officer of Fannie Mae, called the Fair, Isaac scoring system "opaque," saying it was hard to determine what factors had influenced a particular score. He said Fannie Mae will replace Fico scores with its own scoring system.

GartnerGroup Inc., the e-commerce consulting firm in Stamford, Conn., took another potshot at the Fico system last week. The system is giving people who comparison-shop for loans on the Internet a black eye, the firm said in a report. From Fico's point of view, those shoppers are applying for loans, GartnerGroup said, so multiple "inquiries" appear in their credit files, harming their credit ratings.

And consumer groups say that more companies should emulate E-Loan, the mortgage lender that recently began disclosing Fico scores to consumers. Normally, consumers are not allowed to see their Fico score unless they have been declined for credit. Even when people do see their scores, the consumer groups complain, it is nearly impossible for them to figure out how the numbers were calculated.

Executives at Fair, Isaac said they do not perceive a systemic problem. "The clients we are dealing with today have not indicated to us that there is an issue with the product," said Michael Rapaport, senior vice president of the San Rafael, Calif., firm. "But clearly if there is a change in [consumer] behavior - and this is what drives the Fico score - we would be taking a look at what changes need to be made."

Mr. Rapaport said Fair, Isaac is trying to gather more information from Fannie Mae about its objections. "Our feeling is that Fico scores are not opaque, because we do divulge the primary factors in a consumer's credit score that kept it from being higher," he said.

David Shellenberger, a Fair, Isaac product manager, called the GartnerGroup finding a "red herring." He said Fico scores do factor in the number of inquiries in someone's credit file, but "they are low on the food chain" - far less important than payment history, indebtedness, or the amount of credit available to the individual.

Racking up a large number of inquiries "could have an impact, but not a lot," Mr. Shellengerger said. "Not like someone who is maxed out on their credit cards."

Mr. Rapaport said Fair, Isaac already made adjustments to the Fico score two years ago, in response to complaints from the offline world similar to those raised in the GartnerGroup study.

Since 1998, consumers who rate-shop in the 30 days before getting a mortgage or auto loan are not penalized by multiple inquiries. Fair, Isaac does not count that activity at all.

Moreover, any inquiries that appear on a credit report 14 days before loan approval that have to do with the same type of loan are counted simply as one inquiry.

A fact sheet Fair, Isaac developed to explain the change to lenders says: "Consumers' search for a car or home loan will not affect their score during that search, provided that it takes place within a 30-day period."

The policy does not apply to credit card searches, because historically people make quicker decisions in shopping for cards, Mr. Rapaport said.

But the system may not work so well when it comes to loan inquiries made through the Internet. GartnerGroup's e-Business Services group concluded that consumers who shop for loans online are harming their credit ratings.

GartnerGroup analyst Rasha Elass says the lending industry places too much importance on inquiries. In the past, inquiries did reflect a higher risk group, she said, but the Internet has changed the way consumers shop for credit.

As for Fair, Isaac's 30-day policy, "a time limit is completely irrelevant with online shopping," Ms. Elass said.

It seems that online rate shoppers take their time about making a decision - they may shop once a week for two or three quarters, Ms. Elass said. But over time they discover that the low rates they qualified for when they first started shopping are no longer available to them. The rates are being hiked, she said, because of the number of loans they have already applied for while browsing.

Internet shoppers often use so called loan aggregators such as LendingTree.com, which serve as mortgage brokers. In its customer agreement, LendingTree acknowledges that it checks consumers' credit reports and that any financial institution it works with has the right to do so as well.

LendingTree says people who agree to their services have not "applied" for credit. Nevertheless, their credit reports are pulled and an inquiry is logged.

"Many Internet shoppers are declined the rates they should have because they have been shopping online," Ms. Elass said. "It's harming both potential borrowers with good incomes and it's penalizing the lending institutions."

Lenders habitually view the number of inquiries in a consumer's credit report as an important factor. "Inquiries are an indication that you have new debt, or are about to get new debt," said Maxine Sweet, a spokeswoman for Experian Inc., the Orange, Calif.-based credit bureau.

Fico scores crept into the mortgage lending business about four years ago, and now 80% of all mortgage loans in the United States are scored at least once by Fair, Isaac, said the firm's Mr. Shellenberger.

David Jeffers, a spokesman for Fannie Mae, said that his company considers Fico scores "highly predictive" but still has difficulty with the way the scores are arrived at. "We have encouraged Fair, Isaac to make its score transparent," he said. "Transparency means both knowing what factors contribute to the score and providing the information that helps the consumer get a better score."

Critics say that even if Fico scores were available on credit reports, as many consumer advocates would like, consumers would not understand how the score is developed or what it means.

"Without knowing what the formula is and how it is derived, I don't find it an accurate way to evaluate a consumer," said Denise Richardson, associate director of the Consumer Aid Education Center of Cleveland.

Ms. Richardson, who is based in Greenfield, Mass., said Fannie Mae's position "is the first major step in making a change."

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