Consumer Access to FICO Scores: Background
FICO® credit risk scores are calculated today by each of the three national consumer reporting agencies — Equifax, Experian and TransUnion — using mathematical formulas developed by FICO. Here is a quick history of how this technology has evolved and been made available to consumers.
Origin — FICO introduced the FICO score with Equifax in 1989. By 1991 all three national consumer reporting agencies were selling the score to lenders. In the process the score revolutionized the way lenders and other businesses assessed consumer credit risk. Because it considers only credit histories, the score offers a fair and objective risk assessment that ignores subjective factors. By assessing a person's general risk of repayment, the score proved useful to lenders throughout their relationship with consumers — from new loan decisions to account management decisions. The score also proved useful to creditors in other industries such as retail goods and telecommunications services. And by providing the first risk assessment consistently scaled across all three agencies, the FICO score made it easier for lenders to tap more than one agency and accelerated the speed with which they could assess risk and make credit decisions. As a result, more consumers gained faster and more convenient access to credit including people who previously would have been denied credit for subjective reasons.
Consumer access — Consumers first became aware of credit scores in the late '90s primarily through their interaction with mortgage lenders. In 2000 FICO committed itself to sharing credit scores and related education with consumers. In March 2001 we joined Equifax in making FICO scores available to consumers for the first time. We launched www.myFICO.com for that purpose and Equifax added a consumer portal to www.equifax.com. Since then FICO has been deeply committed to empowering consumers with actionable information for managing their credit relationships and improving their financial prospects. Working with each of the three consumer reporting agencies, by 2003 FICO made available to consumers the same FICO scores that thousands of lenders were buying from all three agencies to help them make credit decisions. The FICO score's importance to lenders makes it the most relevant and vital credit rating tool available to consumers. Today the FICO score remains the only credit score widely used by lenders that is also shared with consumers.
Lenders disclose scores — In 2008 the global credit crisis significantly changed the credit landscape for consumers. Lenders changed gears and focused harder on controlling their risk. This shift increased the importance for consumers of learning and understanding their FICO scores both to protect their current credit relationships and to qualify them for new loans. Major financial institutions have recognized this need and some are now sharing with their customers the same FICO scores they buy from the consumer reporting agencies. By empowering consumers with relevant and actionable scores, lenders are providing key credit education that will help consumers improve their financial standing and ultimately contribute to the nation's economic recovery.
Backstep — On January 15, 2009, Experian notified FICO that, effective February 14, Experian will no longer permit the distribution of Experian-based FICO scores or credit reports to consumers through myFICO.com. As a result, consumers will no longer be able to see or manage the FICO scores that Experian is selling to lenders.