Magazine article American Banker

Fair, Isaac Taps Institutions for Credit Score Distribution

Magazine article American Banker

Fair, Isaac Taps Institutions for Credit Score Distribution

Article excerpt

A year ago, Fair, Isaac & Co. abruptly reversed its long-held stance that its Fico credit scores should be kept away from consumers, and advocated that the scores be disseminated and explained.

Now the risk management company is taking its openness policy several steps further. It is introducing new consumer products, including guides showing which scores fetch which interest rates and a service alerting consumers when their Fico score has moved up or down enough to put them in a new interest rate bracket.

To sell these products, Fair, Isaac says it needs the top U.S. banks to act as distributors. In exchange, the 46-year-old San Rafael, Calif., company says, banks can take all the kudos for improving their customers' scores -- and can earn a commission fee as high as 25%.

At first it was regulatory pressure that pushed Fair, Isaac to put its Fico scores, which most lenders use to evaluate creditworthiness, at consumers' fingertips. In March of last year it and the credit bureau Equifax Inc. started selling an online product called Score Power that featured a combined Fico score/credit report.

Now that that offering has proven so popular, Fair, Isaac has seen that it can make a good business of packaging and selling its credit information to consumers, and it has been motivated to come up with more products.

The products also answer a frequent complaint from people who say they have been victims of predatory lending: that lack of access to their credit scores hampered their ability to obtain good loans.

One of the first financial institutions to sign on to Fair, Isaac's latest program is Citibank. The retail banking unit of Citigroup Inc. has begun displaying links to Fair, Isaac's consumer direct site -- www.myFICO.com -- on its mortgage-related Web pages, including www.iown.com and www.citimortgage.com. Ellie Mae and Intuit Inc. also have links to the Fair, Isaac Web site.

Citibank declined to discuss the addition, saying it is still in testing mode. And while it may be too early to tell whether Citibank customers will click through, Fair, Isaac is quick to point out that in its first three months myFICO.com had more than 40 million visitors. In the year since its launch, more than a million consumers have bought their Fico scores through the Web site (as part of Score Power, which sells for $12.95, or $38.85 for four looks).

Sue Simon, the Fair, Isaac vice president in charge of the myFICO business, said the new Fico product fits in with Citi's general "empowerment" campaign. Citi, she said, is among many banks that "have put themselves in the role of financial coach" by offering consumers tools to identify their particular financial needs. Once that assessment is made, the bank can pitch its products and services. …

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