For Rent: Your Credit Score

For Rent: Your Credit Score
Loophole in FICO Enrages Lenders

By Martin H. BosworthConsumerAffairs.Com

June 5, 2007

Plastic Prison • Credit Tips And Tricks• Get Control of What You Owe• No Easy Way Out Of Credit Card Debt• Penalty Fees, Interest Rate Hikes, and Misleading Contracts Await Credit Card Shoppers• "Convenience Checks" Carry a Heavy Price Tag• New Forms of Credit Scoring• Understanding Credit• Credit Bureaus: Who You're Dealing With• Reading Your Credit Report• Credit Scoring: The Fickleness of FICO• Credit Knowledge: A Long, Hard, Struggle---News• For Rent: Your Credit Score• Fed Proposes Tighter Controls On Credit Card Rates• Senate Bill Would Curb Abusive Credit Card Practices• Senate Panel Slams Abusive Credit Card Practices• Congress Targets Credit Card Companies For Reform• Report Finds High Debit Card Overdraft Fees• Bank, ATM Fees Continue To Rise• Credit Card Fees Rise, Disclosure Statements Inadequate• Free Credit Reports Mark First Anniversary• Credit Card Debt Sinking Many Older Consumers• Experian Launches New Credit Score; Critics Unimpressed• Credit Cards Target Students• Credit Card Companies Fear "Perfect Storm"• Credit Bureaus Introduce New Scoring System• More Banks Using Universal Default to Hike Interest Rates

The all-important three-digit number known as your credit score has become the central pivot on which the financial industry moves.

Borrowers are repeatedly told to demonstrate good financial behavior not just for its own sake, but to ensure that their credit score stays high enough to receive approval from lenders. And a score that doesn't meet with lenders' approval can keep otherwise responsible borrowers from getting a home or car loan for years.

So it should come as no surprise that companies like InstantCreditBuilders.com (ICB) and Addatradeline.com have devised a way to game the system -- in this case, by paying people with high credit scores to let low scorers "piggyback" on their ratings and receive boosts to their own scores as a result.

The new trick takes advantage of a loophole in the credit system. People who have little or no credit histories, such as college students, can be added as an "authorized user" to credit cards that are ultimately paid for by Mom and Dad.

In this case, the "authorized user" with good credit is paid several hundred dollars to "rent" their credit score out to someone else, with the agency taking their cut from the potential piggybacker.

Lenders Object

Although the Federal Trade Commission has been taking a wait-and-see approach to the issue, the financial and mortgage industries are already on the warpath.

The National Association of Mortgage Brokers (NAMB) is planning to release a statement opposing the practice. Mortgage lenders say the practice undermines the trust lenders place in the FICO score, which is by far the most widely-used scoring system for new loan approvals.
"We have become so dependent on FICO scoring that we rely on it almost to the point that FICO is the decisionmaking process," Bremer Mortgage president Jim Miley told the Minneapolis Star-Tribune. "If we can't get assurances that FICO scores are accurate, then we will definitely go back to manual underwriting of loans, a time-consuming and expensive process."

Unforeseen Consequences

Fair Isaac, creators of the FICO score, has said that it will close the "authorized user" loophole in its credit scoring model to protect against "piggybacking." John Ulzheimer of Credit.com says that the move is going to "screw consumers royally."

"A lot of people are going to get penalized for something a few bad apples did," Ulzheimer said in an interview with ConsumerAffairs.Com. "The value of any authorized user on a credit card is now totally lost."

Ulzheimer said that anyone who has built a credit history as an additional user on a card, ranging from college students to married couples and divorcees, will have to "rush out" and open up new credit accounts to rebuild or maintain their scores and credit histories.

"It won't be as big a rush as people filing bankruptcy before the new laws took effect,"
Ulzheimer said, "But you'll see it happen."

Ulzheimer, who formerly worked at both Fair Isaac and Equifax, said companies like ICB are liable for enforcement under the Credit Repair Organizations Act (CROA), which mandates the rules that so-called "credit repair organizations" work under. "The minute they take money in advance, they're liable under CROA," he said. "This is a case of merchants ripping off businesses, and some consumers ripping off lenders."

Bad Data

FICO became dominant largely because it streamlined the formerly cumbersome and detailed process of lending down to a simple number.

Whereas local credit bureaus and mortgage lenders would previously look at a person's entire financial history and make calls based on individual judgment, the modern system relies almost totally on the proprietary algorithm developed by Fair Isaac, and based on information in credit reports that is very often inaccurate.

The ease with which credit could be approved led to an explosion of availability of lending to people who would not ordinarily have qualified, but the mania to approve credit and sell reports and scores to lenders also led to constant errors and mistakes in reports that are very difficult to correct.

Now the housing market is in the doldrums, thanks to subprime loans going into default and foreclosure accross the country. Even the Federal Reserve is reconsidering the easy access to credit that consumers have come to take for granted.

And the closing of the "authorized user" loophole won't just make building credit tougher for consumers -- it's exposed a vulnerability in the FICO score that has competitors like the credit bureau-backed VantageScore ready to pounce.

John Ulzheimer had previously criticized the new score, which is sold right from the three bureaus, as "an effort to confuse consumers and unsophisticated lenders."

Now, he said, "I wouldn't be surprised if there was an all-hands meeting at VantageScore Solutions to discuss what to do" about the loophole in the FICO score. "They're licking their chops."

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Highs & lows for consumer in search of his credit score

BY ASA AARONSDAILY NEWS COLUMNIST
Posted Monday, June 4th 2007, 4:00 AM
When Mel Larson requested his free annual credit report from a major credit reporting agency, he also ordered his credit score. "There was a $5 charge, but I felt it was a good idea since the number is important," he explained.
But he wasn't happy with what he got. "I received something called a VantageScore, not the FICO score I expected," he said. "My score was 898, well over the top FICO score.
Can a VantageScore be translated to a FICO score?"
Not exactly. Credit scores are the three-digit numbers that lenders use to assess the credit risk of a potential borrower.
Fair Isaac's Classic FICO score is the most often used credit score in consumer lending and mortgage lending. FICO scores range from 300 to 850.
Although FICO scores remain dominant, several alternatives have developed within the past few years.
In March last year, the nation's three leading consumer credit reporting companies - Equifax, Experian and TransUnion - jointly launched their own proprietary credit scoring system, VantageScore.
When you order your credit report fromExperian or TransUnion, you receive a VantageScore. Equifax, however, still provides FICO scores.
If you want to get a FICO score based on your Experian or TransUnion credit report, you have the option ofordering it from Fair Isaac (www.myfico.com).
Otherwise, you can only roughly compare your FICO score and VantageScore.
VantageScores range from 501 to 990, and approximate the letter-grade system used in most schools. That means a score of 901 to 990 is an A, while a score of 801 to 900 is a B, 701 to 800 is a C, 601 to 700 is a D and 501 to 600 is an F.
If you have a FICO score of more than 730, then you're in the solid B range. If it's 770 or more, you get an A. FICO scores of 680 to 729 are in the C range, while scores of 620 to 679 are Ds. Anything lower than 620 is an F.
Asa Aarons is a consumer reporter whoappears at 5:30 p.m. weekdays on WNBC-TV, Channel 4. His special Daily News column appears Mondays, Tuesdays, Thursdays and Fridays. Send your questions to Ask Asa, P.O. Box 3310, NewYork, N.Y. 10116 or e-mail him (AskAsa@gmail.com). Questions can be answered only through this column.End Content Columns -->

VantageScore Solutions Names Michael Dunn Vice President of Strategic Planning and Communications.

STAMFORD, Conn. -- VantageScore Solutions, LLC, an intellectual property company whose VantageScore consumer scoring model has unparalleled predictiveness and can be uniformly applied to credit data from the three national credit reporting companies, announced today the appointment of Michael J. Dunn as the company's vice president of strategic planning and communications.

Mr. Dunn, 44, is responsible for leading the design, execution, and integration of myriad strategic planning and communications initiatives, such as advertising, branding, public relations, and trade association and regulatory community outreach. He reports directly to Barrett Burns, VantageScore Solutions' president and CEO.

"Mike's considerable brand management experience, general business acumen, and financial services expertise make him the ideal candidate to assume the mantle for overseeing VantageScore Solutions' strategic planning and communications function," said Mr. Burns. "We are delighted to have someone of his caliber on board as we continue to build on the positive 'buzz' in the industry for VantageScore."

Prior to his new position, Mr. Dunn most recently served as vice president of marketing at Webster Bank, a 177-branch retail bank based in Waterbury, Connecticut, where he was responsible for brand marketing strategy, execution, and performance measurement. During his tenure, Webster Bank enjoyed the strongest consumer awareness levels in its 71-year history for its brand in the bank's core Connecticut marketplace.

Earlier in his career, Mr. Dunn was a managing supervisor at Mintz & Hoke Communications Group, one of New England's largest advertising and public relations firms. He also served as vice president of marketing at Intergis, a B2B software development firm, and held several positions of escalating authority at communications firm Mason & Madison (now Mason, Inc.), where he created an independent e-business unit that helped clients formulate online strategies.
Mr. Dunn earned an undergraduate degree in communications with an emphasis in advertising from Ithaca College. He is the recipient of the marketing industry's prestigious Silver EFFIE Award for his contributions to the Vermont Lottery marketing campaign.

About VantageScore Solutions

Stamford, CT-based VantageScore Solutions, LLC was founded in March 2006 as an independently managed joint venture between the country's three national consumer credit reporting companies -- Equifax, Experian, and TransUnion -- to develop a universal, highly predictive, and consistent credit scoring system for the consumer credit markets. The resulting VantageScore service is independently marketed and sold separately through the three credit reporting companies via licensing agreements with VantageScore Solutions. For more information, please visit www.VantageScore.com.

Overhaul of FICO is coming

Overhaul of FICO is coming

Kathleen Pender

Sunday, May 20, 2007

Fair Isaac said last week that it will introduce a more powerful credit-scoring system in September, but said it's not a response to criticism that the company's widely used FICO scores did a less-than-stellar job predicting defaults as the mortgage market grew more exotic.

The Minneapolis company said the new version will increase "predictive strength by 5 to 15 percent," especially for new accounts, subprime borrowers and borrowers with thin credit bureau files.

While it's promising big improvements for lenders, the company says the new system will have little impact on consumers.

"Some consumers' scores will go up slightly, some will go down slightly," says Fair Isaac spokesman Craig Watts.

The company would not explain what would cause a score to change, which is a shame considering the growing impact credit scores have on our lives. Lenders use credit scores to make or deny loans and set terms and rates. They are also being used, where allowed, by insurance companies, landlords, employers and utilities.

Credit scoring applies a formula to the information in your credit file and comes up with a number that predicts how likely you are to default on a loan.

Credit scores have performed so well that lenders have placed growing faith in them, perhaps too much. As long as borrowers had decent credit scores, many lenders were willing to lend them up to 100 percent of a home's value and let them make no principal and partial interest payments for a number of years. Many let customers state their income without documenting it.
Some critics say FICO scores did not perform as well as expected in this Wild West environment.

In a December conference call, HSBC finance chief Douglas Flint said that in 2005 and 2006, a "considerable amount of activity ... moved away from more-traditional products to affordability products" such as adjustable-rate mortgages, stated income loans and option ARMs. These products let people afford bigger mortgages with smaller monthly payments.

"What is now clear is that FICO scores are less effective or ineffective in circumstances where the ability to meet payments is beneficially enhanced by virtue of the fact that the payment obligations have been reduced because of very low interest rates. In other words, the FICO scores' predictive ability, because people weren't missing payments, were recording higher creditworthiness than might have been the case if they had had to make payments at more normalized interest rates, or without the benefit of affordability elements," he said.

Fitch Ratings, which rates mortgage-backed securities, says that as lenders added more layers of risk to a loan, the borrower's FICO score became less predictive.

For mortgages issued in 2003, before lenders abandoned common sense, borrowers who defaulted had significantly lower scores than those who didn't, says Glenn Costello, a Fitch managing director.

Borrowers who became 90 or more days delinquent had an average FICO score of 589 compared with an average score of 620 for those who never paid that late -- a difference of 31 points.

For loans made in 2006, that margin had shrunk to only 10 points. Borrowers who became seriously delinquent had an average FICO score of 615 compared with 625 for those who didn't.
"The loans that are defaulting now have higher FICO scores" than in the past, Costello says.

He adds that FICO scores still do a good job predicting risk, all else being equal. "If you have two loans with the exact same attributes, the person with the lower FICO score has a higher probability of default. If I take person with the higher FICO, give them a piggy-back second or a stated-income loan" and the default risk increases, he says.

Costello says FICO scores can still be useful as "part of a healthy balanced diet."

PMI Group, which insures mortgages with low down payments, uses FICO scores "as one of many different data elements in assessing risk," says Mark Milner, the firm's chief risk officer.

PMI looks at borrower-related data, including FICO scores; loan-related data, such as the interest rate and payment structure; and property-related data, such as whether the home is owner-occupied, a rental, single-family or condominium.

"For what it is, a FICO score is a very strong variable. But it's hardly the only one," says Milner.
Ron Totaro, Fair Isaac's vice president of global scoring solutions, says the FICO revamp has been in the works for 14 to 18 months and is not a reaction to recent criticism.

"We've talked to lenders, regulators and individuals who use FICO scores to drive their decisions. There has been no feedback that says these scores are working any differently than they have over the last 18 years," Totaro says.

The new version could be a reaction to VantageScore, a credit-scoring system developed jointly by the nation's three major credit-reporting agencies: Experian, Equifax and TransUnion.
Fair Isaac has sued the three agencies, alleging that VantageScore violates antitrust laws and confuses customers.

One of VantageScore's touted benefits was that it would do a better job with thin-file customers, meaning those without much credit history such as young people and recent immigrants.
The FICO upgrade also expands assessments of thin-file borrowers.

Fair Isaac now divides the population into 10 segments based on credit histories and applies a slightly different formula to each. Eight segments include people with no serious credit blotches and two are for people with serious problems.

The new system will divide the population into 12 segments: eight for people with good credit and four for people with bad credit. This will deliver better results for people in the lower end of the credit spectrum, Watts says. The system also incorporates changes in consumer behavior since its last upgrade.

Net Worth runs Tuesdays, Thursdays and Sundays. E-mail Kathleen Pender at
kpender@sfchronicle.com.

This article appeared on page E - 1 of the San Francisco Chronicle

FACTBOX - FICO credit score components, from Reuters, Posted By Robert Paisola

FACTBOX - FICO credit score components

Thu May 10, 2007 5:09PM EDT

Credit scores, dominated by the Fair Isaac Corp.'s FICO system, are relative measures of a person's creditworthiness.

The scores are used by banks and other lenders to determine if a person will get a loan and how much they will pay.

Here are components of the FICO score:

-- Payment history, 35 percent of score. Late payments on credit cards, mortgages, student loans etc. will show up here and reduce the score.

-- Amounts owed, 30 percent of score. Total amount owed on a credit card compared with the total credit line. The higher the amount owed relative to the credit line, the lower the score.

-- Length of credit history, 15 percent. A short credit history will reduce the score. Experian, Equifax and TransUnion have developed VantageScore to reach more people with "thin" credit histories.

--New credit, 10 percent. The more request one makes for new credit accounts, the riskier they are perceived.

--Types of credit used, 10 percent. FICO considers the mix of credit cards, retail accounts and mortgages.

Opinions differ on effectiveness of FICO score, Posted by Robert Paisola

Opinions differ on effectiveness of FICO score

Fair Isaac says its FICO score works just fine. But rising defaults have prompted some to question whether the system has flaws.

By Thomas Lee, Star Tribune

Don't blame the messenger.

That might not be anyone's idea of a great corporate slogan, but executives at Fair Isaac Corp. are finding themselves playing defense this year about the company's most vaunted product.
As subprime mortgage defaults continue to rise, some lenders are questioning the value of Fair Isaac's FICO score, which measures a consumer's ability to pay back a loan.

"FICO scores were one of the best predictors of early defaults," said Glenn Costello, an analyst with Fitch Ratings, a credit-rating agency based in New York. "Today, that is not true."

In December, a top executive with HSBC Finance, a major subprime lender, told investors that FICO scores were "less effective or ineffective" in predicting behavior during a period of aggressive lending and low interest rates.

Defenders of the FICO score say the product works just fine. They say overaggressive lenders, hungry for profits, are more to blame for the increasing number of defaults among homeowners, because they loosened underwriting standards to take in more marginal borrowers and also sold riskier products such as adjustable-rate mortgages.

"We're confident that FICO does what it is supposed to do," said Ron Totaro, vice president of global scoring solutions for Minneapolis-based Fair Isaac. "Lenders develop their lending strategies, and they use as little or as much information as they want."

Totaro said there is "no evidence" that FICO scores are not effective when applied to borrowers who fit in the riskier subprime portion of the market.

Any perception that FICO is faulty could have serious consequences for Fair Isaac. FICO is both the company's best-known product and the most popular credit-scoring system in the United States. Last year, FICO scores generated $177.1 million in sales, about 21 percent of Fair Isaac's total revenue.

What's worse, the company has already been struggling to boost its sales. Last week Fair Isaac said second-quarter revenue fell 3.4 percent to $201 million.

FICO also faces a challenge from VantageScore, a new credit-scoring system developed and marketed by Experian, TransUnion and Equifax, the country's three top credit-reporting agencies. Fair Isaac is suing the agencies, claiming VantageScore violates antitrust laws. By jointly offering VantageScore, the agencies are in the position to shut out FICO and other competitors from the credit-scoring market, according to papers filed in U.S. District Court in Minneapolis.

VantageScore executives see the subprime fallout as an excellent chance to promote their product.

"Absolutely, it helps us," said Barrett Burns, VantageScore's chief executive. "It offers us a great opportunity for lenders to look at VantageScore. Since our score is more accurate and predictive, there would have been improvement" in mortgage defaults had the industry used VantageScore instead of FICO, he said.

A recent Fitch Ratings report seems to lend some support to Fair Isaac in the debate. Some of the industry's riskiest subprime products -- high loan-to-value mortgages, piggyback loans and others that required little or no documentation of income -- made the FICO score "less significant relative to other attributes as an early default indicator," Fitch said.

In 2003, loans that defaulted within 12 months of issuance had FICO scores that were 30 points less than loans that did not default. Last year that difference shrank to 10 points, according to Fitch.

Others say the troubles among subprime loans simply show the limitations of credit scores. Loan officers can't look to FICO scores when trying to weigh how changes in interest rates, the type of loan or sudden events could affect a borrower's ability to pay, said John Ulzheimer, president of Credit.com Educational Services, a San Francisco-based financial services company.
"The score is the score," said Ulzheimer, a former Fair Isaac manager who helped build credit-scoring models. "It doesn't take into account external factors."
For instance, Hurricane Katrina's devastation could have turned healthy FICO scores of 750 among Gulf Coast residents into 450s in a relatively short period of time, in which case "the credit scores looked like they had failed," Ulzheimer said.

Still, credit-scoring companies must do a better job in establishing consistent scores for borrowers with patchy credit, said Craig Focardi, an analyst with TowerGroup, a research and consulting firm in Needham, Mass. Credit scores below 640 fluctuate more often than scores of 700 or better, he said. Companies such as Fair Isaac also should develop credit scores that take into account additional categories of risk instead of "lumping customers into similar brackets," he said.

Fair Isaac sells a product called NextGen FICO that Focardi says better measures the credit risks posed by subprime borrowers, but mortgage lenders have been reluctant to adopt it because it costs more than a standard score. VantageScore could inject some needed competition into the business, Focardi said.

"The mortgage industry needs to reevaluate whether one score is good for all customer segments," he said.

Totaro of Fair Isaac said the company constantly updates and refines FICO scores. Asked if some subprime lenders are unhappy with the service, Totaro replied: "We have talked to numerous clients. We will work with them to show them how the FICO scores work."

Ulzheimer said lenders never liked FICO scores, especially when a low score disqualified a potential borrower from getting a loan. Most lending operations are set up so that fees are generated by granting loans, not turning people away. But in the recent housing boom, lenders just got too greedy and sold unsuitable products to consumers, he said.

"You do your best to explain how the model is built and what it can do," Ulzheimer said. "But some lenders are going to do whatever they want to do. You never hear from lenders when things are going well. But the minute the FICO score doesn't do what they want it to do, it's amazing how loud they scream."

Thomas Lee • 612-673-7744 • tlee@startribune.com

©2007 Star Tribune. All rights reserved.

Robert Paisola, CEO of Western Capital, Announces 2007-2008 Price Schedule

Due to the Recent Media Attention, we have been receiving a large number of calls regarding how much it would cost to have Robert Paisola speak at events throughout the world. Here is a simple price sheet. Prices are subject to change based on topics covered, Profit or Non-Profit and General Attitude of the Requestor.

See www.RobertPaisola.com for an Introduction based on the Hit Movie "THE SECRET"

2007-2008 Fee Schedules

Email : bookings@mycollector.com for the next Available Date!

3 1/2 FULL DAYS ONSITE WITH ROBERT AT YOUR LOCATION ANYWHERE IN THE WORLD $15,500.00 USD

3 1/2 FULL DAYS ONSITE WITH ROBERT AT YOUR LOCATION ANYWHERE IN THE WORLD ON TIMESHARE SALES $12,500.00 USD

CONVENTIONS, TRADE SHOWS, CORPORATE MEETINGS & CONFERENCES

NORTH AMERICA (Includes Canada and Mexico)

Keynotes and Seminars (up to 3 hours) $6.995,000

Full Day Seminars (up to 6 hours) $8,995.00

INTERNATIONAL

Keynotes and Full Day Seminars $15,500 USD

MULTIPLE PROGRAMS

We offer a 50% discount for additional programs booked for the same day at the same conference. For example, the first program is contracted at full price and every additional program is contracted at half price. We offer a 25% discount for additional programs booked by the same client/sponsor. For example, the first program is contracted at full price and every additional program is contracted with our 25% multiple booking discount. NOTE: This discount is applicable only if the contracts are issued simultaneously.

MEDIA & PUBLICITY

In order to create excitement and awareness of Mr. Paisola’s appearance at your event, he is happy to fulfill media requests when his schedule allows. Pre-recorded interviews are preferred over live interviews.

TRAVEL EXPENSES

Travel expenses are in addition to the speaking fee. Travel expenses include first-class airfare, up to 2 night’s hotel accommodations (Before and After the event) (king, non-smoking, guaranteed late arrival), meals and ground transportation in host city. A $75 per diem is also charged to cover ground transportation in home town, tips, and meals while traveling. To reduce Mr. Paisola’s out of pocket expenses, we request that hotel room charges be billed directly to the organization’s master account. When Mr. Paisola’s schedule includes more than one program on the same tour, airfare expenses are prorated.

HOLDING & CONFIRMING DATES

If you have specific dates in mind for your meeting, we're more than happy to hold a date for you. This hold can be placed on our calendar for up to 30 days. If another client requests the dates you are holding, you will be notified by phone and given 48 hours to make your decision either to go to contract or release the dates. To secure the date, a program agreement will be issued. This agreement is to be executed and returned within two weeks and requires a 50% deposit. The remaining 50% balance is due two weeks prior to the appearance.

RECORDING THE PRESENTATION AT YOUR EVENT

If you wish to video or audio tape Mr. Paisola’s presentation, you must sign a release. There are two forms; one is if you wish to use the recording for archival purposes only. The other is for those who wish to make the recording available to attendees or later for a period of time (either video or audio.) In either case, the releases must be signed, returned and approved by Robert Paisola

What Clients Are Saying About Robert’s Presentations:

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You covered so much valuable information; I want to get back to my queue NOW!"
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Great information presented in easy to understand language.”
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Fair Isaac filed anti-trust suit against Equifax, Trans Union and VantageScore

Fair Isaac sues credit-scoring companies

Thursday October 12, 3:11 pm ET

Fair Isaac Corp. said Thursday that it has filed an antitrust lawsuit against three agencies that have partnered to launch their own credit-scoring system, VantageScore.
Fair Isaac said the three agencies—Equifax Inc., Experian Information Solutions Inc. and TransUnion—are using anti-competitive practices to market their new product.

Minneapolis-based Fair Isaac has its own credit-scoring system, FICO. All three defendants have the ability to set a price for what a lender pays for FICO scores, and can also set prices for VantageScore. This ability allows the companies to unfairly promote their product by manipulating pricing, Fair Isaac argues.

“We have competed against the credit-report agencies’ scoring products for many years, and we are happy to compete on a level playing field,” said Tom Grudnowski, CEO of Fair Isaac, in a statement. “However, the recent agreement between the three powerhouse agencies unfairly threatens our ability to compete and inhibits the ability of consumers and lenders to enjoy the benefits of continued innovation, choice and competition in the credit-information marketplace.”

Fair Isaac (NYSE: FIC - News) is a credit-scoring and software company.

Published October 12, 2006 by the Minneapolis/St Paul Business Journal

This has to be about as absurd as it gets! Hopefully they’ll waste a TON of money on suing each other and MAYBE somebody will file the lawsuit on behalf of consumers.

After all, creditors pay PENNIES for credit reports and scores and the CRAs and Fair Isaac conspire to OVERCHARGE consumers, charging literally thousands of percent more to consumers than to businesses for the same products.

CreditData Southwest paid 15 cents per FICO score

There you have it ... and what are the “consumer advocates” doing?

Computer Security: ChoicePoint's Lessons Learned

Computer Security: ChoicePoint's Lessons Learned
By Todd Spangler

A year and a half after mistakenly selling consumer info to criminals, the data broker says it has put in dozens of new policies and procedures to make sure such a security breach doesn't happen again.

A rash of security breaches has hit the headlines recently, chief among them the theft of a Department of Veterans Affairs' laptop with data on 26.5 million vets. Perhaps the best advice on how to respond if your company is caught in the line of fire comes from one that has been there itself: consumer data broker ChoicePoint.

In February 2005, ChoicePoint acknowledged that it had mistakenly sold personal information on thousands of individuals—as it turned out, more than 163,000 people—to bogus companies set up by Nigerian criminals (see ChoicePoint: Blur, from Baseline's June 2005 issue).

The Federal Trade Commission this January fined the Alpharetta, Ga.-based company $15 million for the disclosures.

Carol DiBattiste, ChoicePoint's chief credentialing, compliance and privacy officer, says the company has taken numerous steps in the past year to make sure such a breach never happens again.

"There's not a company around today that takes security more seriously than we do," claims DiBattiste, who joined ChoicePoint in March 2005 after serving as deputy administrator of the U.S. Transportation Security Administration. She says ChoicePoint has passed 43 security and privacy audits in the past year.

Gartner analyst Avivah Litan says ChoicePoint's security practices are now extremely strict—and appear to be among the best in any industry. "When you're fined and caught after a data breach," she says, "you really shape up."

Some of ChoicePoint's changes involved business practices. The company says it has improved customer-screening procedures, verifying their authenticity via multiple sources and by physically visiting their premises. It also now provides personally identifying information like Social Security numbers only as part of consumer-initiated transactions (as when someone applies for a home loan), as part of fraud-prevention programs or when requested by law enforcement officials.

But ChoicePoint has also tightened the screws on its information-technology infrastructure, with what DiBattiste says are more than 30 new policies and procedures.

It's enhanced user ID and password protections—if employees forget their passwords, they must take a five-question quiz (example: "What year was your Social Security number issued?") to reset it; if they fail that, they must pass a 15-question quiz with a systems administrator.

ChoicePoint has blocked access to its network from all non-U.S. Internet addresses, with a few exceptions that DiBattiste declined to detail. It has put employees at each of its 60 U.S. locations in charge of verifying the destruction of outdated consumer information, which the company is required by law to dispose of.

And the company now encrypts all data feeds to the three major credit bureaus as well as certain information stored in its databases, such as credit card numbers. DiBattiste adds that a project to move to laptop encryption "across the board" is still in the works.

Another new measure: ChoicePoint this month created a security advisory committee comprised of DiBattiste, the company's CIO, head of internal audit, the chief business officer, chief marketing officer, chief administrative officer and general counsel. The group meets regularly "to ensure we're hitting every aspect of security and privacy," says DiBattiste.
"One of the lessons we learned is that security is a moving target," she says. "The bad guys move too. So we have to constantly be in touch with the things we need to be doing to respond."

Credit Bureaus Hope to Displace FICO Score as Industry Standard

June 22, 2006

The Experian credit agency became the first to start selling its new "VantageScore" credit scoring system this week. Critics aren't impressed.

John Ulzheimer of the credit information Web site CreditBloggers said that the hype over the VantageScore was "nothing more than an effort to confuse consumers and unsophisticated lenders."

"I'm not angry at the bureaus for trying to muscle out FICO," Ulzheimer said. "[M]y question is could they have spent their collaborative time together more constructively for consumers?"

The three credit bureaus jointly developed VantageScore as an alternative to the lending score created by the Fair Isaac Company (FICO), which is the standard score used by lenders to judge a borrower's creditworthiness.

For $5.95 a pop, users can buy the Experian VantageScore and see where the new credit system ranks them in terms of attractiveness to lenders. The new VantageScore system grades consumers on a number scale from 501 to 990, with a corresponding letter grade of "F" to "A."
Experian information solutions group president Kerry Williams says the new score "responded to the clear need for an objective scoring model that works across all three reporting companies' data."

Currently, Experian and fellow credit bureau TransUnion offer their own "proprietary" credit scores with the reports borrowers can purchase, but these scores are often wildly divergent from a consumer's real FICO score.

Although the bureaus claim these scores are "educational," they're heavily advertised as being legitimate credit scores that borrowers can use to judge their credit stability. Lenders, however, largely prefer the traditional FICO score, due to its longevity and prominence in the industry.
Equifax, the third of the "Big Three" credit bureaus, has been offering its true FICO scores with its reports. The scoring formula FICO uses has been closely guarded by the company as a trade secret, and the major credit bureaus have to pay Fair Isaac a licensing fee to use it in their credit scoring and reports.

CreditBloggers founder Emily Davidson purchased her VantageScore on June 20th and compared it to her Experian FICO score. According to Davidson, the ordering process was clumsy and counterintuitive, and the score ranking did not include information from her Experian credit report.

"Experian's VantageScore was difficult to interpret and their ordering system was poorly designed," she said. "If the bureaus are serious about competing with FICO, they need to work on making this score the best in the industry for both consumers and businesses."
The new credit score system has been criticized for making the same mistake as the current credit scoring system -- relying on inadequate or inaccurate data reported to the bureaus.
Sloppy record-keeping, mixing of different consumer records, and complex dispute resolution processes mean that even if the three bureaus are sharing the same score, they're still relying on bad data to make their scoring decisions.

Mortgage rate can't go up if lending bank is bought!

DAVID MYERS: Mortgage rate can't go up if lending bank is bought

June 4, 2006

Dear David: I was lucky enough to refinance when mortgage rates bottomed out at about 5.5% last year. Now, the bank that gave me the mortgage is being purchased by another lender. Can the new lender raise my rate?

Dear Reader: The terms of your mortgage cannot be changed simply because your current lender is being purchased by another bank. About the only thing the new lender can do is require that your monthly payments be sent to a different address.

Dear David: We are interested in creating a basic living trust, so we purchased two books about estate planning to learn more. One of the books recommends that in addition to creating a trust, people should also sign a "durable power of attorney for finances" form. Is this really necessary?
Dear Reader: You're not required to sign a durable power document to create a money-saving trust, but many homeowners choose to do so for personal reasons.

Forming a simple living trust is an inexpensive way to help ensure that your home and other assets will pass quickly to your heirs instead of going through the long and costly probate proceedings that are mandated by a typical will. When you die, the successor trustee you selected can distribute your home according to your wishes.

If you also sign a durable power of attorney form, you'll give the successor trustee the additional ability to take care of any assets that you left outside the trust. The forms are available for about $5 at most business-supply stores.

Dear David: I recently applied to refinance my mortgage. Instead of giving me a FICO credit score like I have received in the past, the lender used something called a "VantageScore." What is that?

Dear Reader: A California-based company called Fair Isaac revolutionized the credit-reporting industry several years ago when it developed the FICO score, which many lenders use today when setting the interest rate to charge on everything from mortgages to credit cards.
VantageScore was developed by the nation's three largest credit bureaus. The system assigns a letter grade to each applicant's rating -- an "A" for borrowers who are in the top 901 to 990 bracket, a "B" for those in the 801 to 900 range, and so on down to "F." The higher your VantageScore, the lower your loan rate.

VantageScore was unveiled earlier this year. Though its scoring system should be easier for most consumers to understand, only time will tell whether it can replace the FICO system.

Contact DAVID MYERS at P.O. Box 2960, Culver City, CA 90231-2960.
Copyright © 2006 Detroit Free Press Inc.

Submit Your Complaints to the FTC Online

Federal Trade Commission Title: Advance Notice of Proposed RulemakingSubject Category: Procedures to Enhance the Accuracy and Integrity of Information Furnished to Consumer Reporting


16 CFR Parts 660 and 661Published: March 22, 2006 View Notice (PDF) (Download Adobe Reader)Comments Due: Monday, May 22, 2006

How To Comment: The Commission in

vites interested parties to comment and submit information useful for developing guidelines and regulations required by Section 312 of the Fair and Accurate Credit Transactions Act. This is part of a joint rulemaking initiative where several agencies must:

establish guidelines for use by persons that furnish information to consumer reporting agencies regarding the accuracy and integrity of the furnished information and establish reasonable policies and procedures for implementing those guidelines.

Section 312 also requires the "Agencies" jointly to prescribe regulations that identify the circumstances under which a furnisher shall be required to reinvestigate a dispute concerning the accuracy of information contained in a consumer report based on a direct request of the consumer Privacy & Use The FTC Act and other laws the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. All timely and responsive public comments, whether filed in paper or electronic form, will be considered by the Commission, and will be available to the public on the FTC Web site, to the extent practicable, at www.ftc.gov.

Any information placed in the following fields on this form -- "Title," "First Name," "Last Name," "Organization Name,' "State," "Postal Code," "Country,' "Comments," and "Attachment" -- will be publicly available on the FTC Web site. Although filling out this comment form is voluntary, the fields marked with an asterisk are required in order for the FTC to fully consider a particular comment. As a matter of discretion, the FTC makes every effort to remove home contact information for individuals from the public comments it receives before placing those comments on the FTC Web site.

More information, including other routine uses permitted by the Privacy Act, may be found in the FTC’s privacy policy, at http://www.ftc.gov/ftc/privacy.htm. Accessibility If you are unable to access this form, click here for an alternate method of submitting a public comment.

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How to Comply with the Fair Credit Reporting Act Teleseminar series

How to Comply with the Fair Credit Reporting Act Teleseminar series


What: To supplement its online How to Comply with the FCRA subscription service (click here for more information), CDIA launched a series of distance learning opportunities to educate the industry on credit reporting issues.

Who: There are specific teleseminars are targeted at different groups that must comply with the FCRA:

• CDIA Members (Consumer Reporting Agencies); and• Non-Members of the CDIA (data furnishers, law professionals and more)

Where: Anywhere! You can participate in teleseminars from the comfort of your office, home or anywhere! These are distance-learning opportunities that save you travel costs and time. Materials are distributed to participants via CDIA's website or email prior to the call.
When: Teleseminars focusing on different issues will be offered throughout the year. Scroll down for a schedule of events. This schedule is updated throughout the year.

Please see the current schedule below for currently scheduled topics, dates and to download registration forms.

Upcoming Teleseminar Dates and topics:

Note: Subscribers to CDIA's How to Comply with the FCRA service receive discounts on this teleseminar series. Click here to subscribe or to learn more.

2006 CDIA How to Comply with the FCRA Teleseminars:
Click on each of the following teleseminar titles to learn more:

Legislation & State Law Updates: A CDIA Teleseminar Featuring CDIA Vice President and Counsel of State Government and Regulatory Affairs

New FTC Issued Consent Decree on Security Breach

New Identity Theft Red Flag Rule

Legislation & State Law Updates: A CDIA Teleseminar Featuring CDIA Vice President and Counsel of State Government and Regulatory Affairs.

Featured Speaker: Eric Ellman, Consumer Data Industry Association

• Thursday, May 4, 2006
2:00 p.m. - 3:00 p.m. Eastern

Program Highlights:
More than half of the states in the U.S. have FCRAs in effect. They not only differ from state to state but often raise compliance issues with the federal Fair Credit Reporting Act as well. Eric J. Ellman, Vice President and Counsel of State Government and Regulatory Affairs, will host a teleseminar on Thursday, April 20th & May 4th at 2:00 pm Eastern. Each teleseminar will survey state legislation in 2005 and highlight trends in new state laws that require legal and compliance attention for consumer reporting agencies, data furnishers, and data users. Included in this review will be legislation and laws that address security freezes, security breaches, the use of Social Security Numbers, and the use of credit header information.

Who Should Register: Companies who have to comply with FCRA current state laws across the United States

This call will be 60 minutes in duration and include a question and answer portion where participants can ask questions.

To register for this event, please click here.

“There was such a popular demand for this teleseminar that we are running it again on May 18th.”

FTC Issued Consent Decree on Security Breach(Speaker: Anne Fortney, Partner with the Hudson Cook, Moderator: CDIA President and CEO Stuart K. Pratt)

• Thursday, May 18, 2006
2:00 p.m. - 3:00 p.m. Eastern

CDIA has brought back by popular demand the teleseminar covering the FTC Consent Decree regarding ChoicePoint. On May 18th at 2:00 p.m., Anne Fortney, partner with The Hudson Cook law firm and former compliance official with FTC, will share her thoughts on the breach issue as it relates to the FTC actions earlier this year. Gain some insight on what this means for other companies that handle consumer information.

This event is open to both members of CDIA, as well as non-members (including data users, data furnishers and other that must comply with the FCRA).
To register for this event, please click here.

Identity Theft Red Flag Rule
Speaker: Amy Friend, Assistant Chief Counsel of the OCC, Moderator: CDIA President and CEO Stuart K. Pratt)

• Thursday, May 25, 2006
2:00 p.m. - 3:00 p.m. Eastern
Amy Friend, Assistant Chief Counsel of the OCC, will be available to discuss the Identity Theft Red Flag Rule at the CDIA teleseminar on May 25th at 2:00 p.m. The Rule, included in the 2003 FCRA FACTA amendments, is expected to be completed this month. You will hear not only a discussion of the just published Rule but also have your questions answered by the principal author of this Rule. You will be hearing more about this teleseminar in the coming weeks.

To register for this event, please click here.
How to Comply with the FCRA Subscription Information:
Non-Members should go to the CDIA E-Store at https://www.cdiaonline.org/store/htc.cfm to subscribe to the How to Comply Service.

Members should logon to Members Only* at https://www.cdiaonline.org/members/index.cfm, select "Member E-Store" and then select "Online How to Comply with the FCRA," to purchase a subscription to How to Comply or sign up for a free 24-hour demo (redline not included in demo).

Please contact CDIAonline at cdia@cdiaonline.org with questions.
Can't participate in a Teleseminar?

Recordings are available for these events. CDIA offers Audio CDs on all its current and previous Teleseminars.

Again- Who and What is E-Oscar!

Consumer Data Industry Association (CDIA), in cooperation with Equifax, Experian, Innovis and TransUnion, is proud to announce the creation of a new state-of-the-art solution for processing ACDVs and AUDs. The new network, E-OSCAR, is the Online Solution for Complete and Accurate Reporting. E-OSCAR is a browser-based, Metro 2 compliant system that is secure, intelligent and intuitive.

E-OSCAR provides multiple benefits, as detailed below. We have enhanced our technology to be a web-based system. It was created with the awareness of the need for strong security around the sensitive data that will be sent through the network. We have provided a toll free industry Help Desk and, in addition, we have significant training resources available to you.

We know that as a leader in the credit industry who is concerned about the FCRA and data quality, you will want to be involved in the initial offering of E-OSCAR. Participation in the new network will provide key customers like you with any necessary personalized attention that you need during your transition. E-OSCAR is fully compliant with the new FCRA and so easy to use that you will want to become part of this new system!

Please begin the steps necessary to move from the current network onto the new one.
Alert your senior management to the upcoming changes. View the information links below to learn more about E-OSCAR. Make Use of the Implementation Checklist to plan your conversion.

What’s happening with E-OSCAR-webTM April 23, 2003

Valued Customer,

We are pleased to inform you that the E-OSCAR-web? Solution is complete and available for use. The Credit Community Network Service (CCNS) supported by Global eXchange Services (GXS, formerly GEIS) will no longer receive new ACDV transactions after May 15, 2003. You will be able to respond to these items until June 15, 2003.

In an effort to assist you with your transition and to ensure that your company is not adversely affected, the Consumer Data Industry Association (CDIA), Equifax, Experian, Innovis and TransUnion have prepared these instructions for you.

If you do not register with E-OSCAR and begin to use this solution to respond to disputes and/or submit automated Universal Data Forms, the National Consumer Reporting Agencies (NCRAs) will send your disputes via paper. In order to ensure that you do not receive paper disputes, you must follow the steps below and register with E-OSCAR

Register immediately at http://www.e-oscar-web.net (If you have already registered, follow steps 3 and on).

We recommend that you print a copy of the registration you’ve completed, as well as, write down and keep in a safe place, the USER ID and password that you’ve created during the registration process.

Once you have received approval notice from one or more of the NCRAs, you should begin the on-line training. If you plan on having multiple users, now is the time to create a USER ID for each of those parties and be sure that all of the users have completed the on-line training prior to receiving ACDVs from the NCRAs.

During the next few weeks, we will begin the final phase of moving the transaction volume of customers from the GXS System to E-OSCAR. We would like to begin getting your AUDs as soon as your registration is approved. We will coordinate with you on transmitting your ACDVs, but we recommend beginning as soon as possible and no later than May 1.

During the registration approval process some of the NCRAs will provide you with a list of the reporting subscriber codes they show affiliated with your particular GXS mailbox. If a bureau does not, you may print off your existing Subscriber Code Table from your current GXS ACDV Software PC at your location. You will need to enter these codes into E-OSCAR after the NCRAs approve your registration. This will assist you in receiving all of your disputes via E-OSCAR without delay.

You must contact each of the NCRAs that you report to and coordinate a date that you would like to begin receiving your ACDVs. As soon as your subscriber codes are approved you may submit AUDs.

Submit the necessary request form to Global eXchange Services to cancel any active mailboxes. Please copy the NCRAs on your request (Addresses are listed at the bottom of this letter).
Respond to all ACDVs remaining in your GXS ACDV Mailbox.

Delete all subscriber codes associated with the mailbox using the GXS PC-based software; this will disable Mortgage Reporting Companies as well as NCRA Affiliates from utilizing the system thus allowing GEIS to effectively close the mailbox.

Call the E-OSCAR Help-Desk if you have any questions. 1-866-MY-OSCAR.

Contact Information: CCNS Administration Global eXchange Services, (GXS) 100 Edison Park Drive Gaithersburg, MD 20878 Help Desk (800) 892-1574 Fax- 301.340.4583

Equifax Credit Information Services Charles Saunders LaDeamya Mixon 1550 Peachtree St. Mail Drop 66N Atlanta, GA 30339 E-mail: Equifax.EOSCAR@equifax.com Phone: 800-925-3329

Experian Patrick Sahf 701 Experian Parkway Allen, TX 75013. E-mail - Patrick.Sahf@experian.com Phone - 972-390-3610

TransUnion 2 Baldwin Place Crum Lynne, PA 19022 Fax - 610/546-4602 Tracy DeMarco Phone 610/546-4753 Email - TDemarc@TransUnion.com Melissa Whayland Phone 610/546-4752 Email - MWhayla@TransUnion.com

Innovis Data Solutions 950 Threadneedle, Suite 200 Houston, TX 77079-2900 Jose M Cruz Phone 281/504-2629 Email: jcruz@innovis-cbc.com

E-OSCAR Help Desk Phone 1-866-696-7227 (MY-OSCAR)

So the CRAs ARE E-Oscar. Interestingly, the Experian attorney Marc Carlson told me last week that I need to get info about reporting from E-Oscar. Nice try! I guess I’ll have to file another notice of deposition to get to an Experian person with a clue about E-Oscar. Experian has been extremely difficult and I need to file a motion to compel.

Experian ensures that people with 5+ year old charge-offs OFTEN have a credit score as if they had just defaulted in recent months. Their profits increase as the credit scores are lowered by their incorrect reporting.

http://www.e-oscar-web.net/ is where creditors log in. Submitting FACTUAL disputes sure doesn’t do the trick, so maybe that’s an alternative.

The PRIVATE E-oscar.org domain registration:

Court Says Furnishers Face Reinvestigation Liability

The U.S. District Court for the Northern District of Illinois has ruled that consumers may sue those who furnish data to credit reporting agencies for failure to carry out their reinvestigation responsibilities under Section 623 of the FCRA. (Dornhecker v. Ameritech Corp., N.D. Ill., No. 00 C 26, 6/7/00). The judge ruled that while the FCRA does not specifically create such a liability, one could be implied from the way the law is written. The case involved telephone accounts that were fraudulently opened in some consumers names. When the subsequent debts were not paid, the phone company retained a collection firm to pursue the bad debts. The collector reported the adverse information to the credit reporting agencies and when the consumers found out about it they asked the credit reporting agencies for reinvestigation of the data as well as reported the fraud to the phone companies.

Two of the consumers sued the phone company, alleging it violated Section 623(b)(1) of the FCRA by failing to properly reinvestigate the disputed data. The phone company said it was only obligated to pursue a reinvestigation when contacted by the credit reporting agency. The consumers argued that furnishers duties under Section 623(b)(1) are indeed owed to consumers. They pointed out that Congress' exemption of furnishers from liability under subsection (a) implicitly made them liable under subsection (b). If Congress had meant to exempt furnishers from liability under subsection (b), it would have stated that fact as it did in subsection (a).

The court said it ruled as it did because it's apparent consumers are members of a class that the FCRA sought to protect and that legislative history shows an affirmative attempt by Congress to hold furnishers of information accountable if they continue to supply inaccurate data after they have been notified. It also backed its decision based on two cases that had been previously adjudicated.

The first involved a similar suit by a consumer over reinvestigation responsibilities under Section 623(b)(1). The court held that "there is no authority supporting the proposition that the FCRA does not create a private right of action". The court recognized that furnishers were exempt from civil liability from subsection (a), the FCRA did give consumers a cause of action against "persons" who are willful or negligent in complying with the Act.

The second citation concerned a case that set forth factors for determining if a private cause of action is implicit in a statute. Saying this case met all four factors, the court concluded that the consumers could file suit against furnishers of data for failing to comply with Section 623 (b)(1).

What is e-Oscar?

e-OSCAR is a web-based, Metro 2 compliant, automated system that enables Data Furnishers (DFs), and Credit Reporting Agencies (CRAs) to create and respond to consumer credit history disputes. CRAs include Equifax, Experian, Innovis and TransUnion, their affiliates or Independent Credit Bureaus and Mortgage Reporting Companies. e-OSCAR also provides for DFs to send "out-of-cycle" credit history updates to CRAs.

The system primarily supports Automated Credit Dispute Verification (ACDV) and Automated Universal Dataform (AUD) processing as well as a number of related processes that handle registration, subscriber code management and reporting.

ACDVs initiated by a CRA on behalf of a consumer are routed to the appropriate Data Furnisher based on the CRA and subscriber code affiliations indicated by the DF. The ACDV is returned to the initiating CRA with updated information (if any) relating to the consumer's credit history. If an account is modified or deleted, carbon copies are sent to each CRA with whom the DF has a reporting relationship.

AUDs are initiated by the DF to process out-of-cycle credit history updates. The system is used to create the AUD and route it to the appropriate CRA(s) based on subscriber codes specified by the DF in the AUD record. The e-OSCAR AUD process is intended to provide the CRA with a correction to a consumer's file that must be handled outside of the regular activity reporting cycle process. e-OSCAR may not be used to add or create a record on a consumer's file or as substitute for "in-cycle" reporting to the CRAs.

To see a demo of e-OSCAR-web, contact the Help Desk at 866-MY-OSCAR (866-696-7227) to obtain a temporary user id and password, then log into www.e-OSCAR-web.net.Questions? Call the e-OSCAR help desk at (866) MY OSCAR or (866) 696-7227.


Equifax Credit Information ServicesRichard Stinnett1550 Peachtree St.Mail Drop 66NAtlanta, GA 30339E-mail: Equifax.EOSCAR@equifax.comPhone: 678-795-7921 Effective Nov 15, 2005

Experiane-OSCAR Customer Support 701 Experian ParkwayAllen, TX 75013.E-mail: experian.e-oscar@experian.comPhone: 972-390-3610

TransUnionTransUnion e-OSCAR Customer Support LinePhone: 610-546-4762

Innovis Data SolutionsMichelle Junk1651 NW Professional PlazaColumbus, OH 43220Phone: 614-442-3710E-mail: michelle.junkschleter@innovis.com

The New Way Lenders Will Size You Up

Just when you finally had FICO figured out, you're getting a brand new score

By Amanda Gengler

April 18, 2006 11:03 PM EDT

(MONEY Magazine) – So the Fed raised rates another quarter point in March. Ho hum. The far bigger news that may affect your future borrowing rates: the unveiling of a new rating system that will compete with the widely used FICO credit score. Developed jointly by the three major credit bureaus, VantageScore should reduce discrepancies between your scores at the agencies, they contend. But it's also likely to lead to confusion, since VantageScore ratings will range from 501 to 990 (a 901-plus score is an A; 801 to 900, a B; down to 501 to 600, an F) vs. 300 to 850 for the FICO scale. For example, a 720 FICO score could land you a 9% rate on a credit card; with VantageScore, 720 might give you a 20% rate, says Curtis Arnold of CardRatings.com. For more info on the new system, go to vantagescore.com.

Fair Isaac Spotlights Latest Strategies and Innovations for Smarter Decisions at InterACT 06

CEO Grudnowski Delivers Insight into the Growing Impact and Applications of Enterprise Decision Management to Customers from 33 Countries

SAN FRANCISCO--(BUSINESS WIRE)--May 1, 2006--Fair Isaac Corporation (NYSE:FIC - News), the leading provider of solutions and technologies for Enterprise Decision Management (EDM), kicked off its 2006 North American InterACT customer conference today in San Francisco. In his opening address, CEO Tom Grudnowski discussed how Fair Isaac's ongoing pursuit of innovation is breaking new ground to help organizations transform and improve the way they make their most critical decisions.

InterACT, the world's leading business forum on business analytics, emerging decision management technologies and their applications, is being held this week in San Francisco, where Bill Fair and Earl Isaac started the company in 1956. Registered attendance of nearly 700 for the company's 50th anniversary conference is the highest in several years, demonstrating the growth in demand for EDM strategies and solutions.

Grudnowski told InterACT delegates that they are among the leading practitioners of EDM, which combines the analytic solutions and decision automation software organizations need to make their decisions more precise, more consistent and more agile, at every customer interaction or decision point. He also recognized clients' central role over the past 50 years in turning the company's solutions for risk management, fraud control, account management, business rules management and more into industry standards.

"We are very fortunate to have clients who understand and value what this company was born to do -- help organizations solve their most complex business problems by consistently making the right decisions at the right time," said Grudnowski. "We've been perfecting the science of EDM in our R&D labs, and working with you to perfect it in the form of thousands of successful deployments around the world. Bill Fair once said, 'We sell a radically different way of making decisions that flies in the face of tradition.' That was true in 1956, and it's still true today."
EDM Innovations in InterACT Spotlight

Key decision management innovations being showcased at InterACT 06 include:
Advances in the battle against fraud, including Fair Isaac's architecture for Enterprise Fraud Management, its vision of a fraud clearinghouse and its research into click fraud.
Fair Isaac's development of its ScoreNet® network, the first "Decision Services Provider" network. This growing network gives businesses access to hosted versions of Fair Isaac solutions, as well as more than 2,000 service providers and 70 third-party databases.
The latest release of Blaze Advisor(TM) business rules management system, the only such system powered by the Rete III algorithm. With Rete III, Blaze Advisor can run complex business rulesets up to 100 times faster than other rules engines.

The next phase in the company's EDM architecture for financial services, which will give banks a common platform for their decision management across the customer lifecycle, and connectivity between point solutions for different decision areas.

A new approach to customer-centricity called "CustomerHD," which uses leading-edge analytics to give marketers a high-definition view of customers and potential customers.
New insights into customer credit issues, including consumer sensitivity to debt load, U.S. and global regulatory issues in financial services, and the implications of HELOCs and debt consolidation for card issuers.

Today's general session also featured a keynote presentation by Jeffrey Sampler, a Fellow of Strategy and Technology at Oxford University and leading authority on how to manage information as a strategic resource for growth and innovation. Sampler provided perspectives on how to lead creatively, how to create business assets where none exist, and the power of the strategic vortex model -- building strategies one on top of the other.

About InterACT
InterACT brings together senior executives, business managers and analysts from the world's leading companies in financial services, insurance, retail, telecommunications, healthcare and the public sector. Fair Isaac began staging customer conferences in 1976 to provide the most-up-to-date insight and information on analyzing data for business decisions.
Over the next three days, InterACT participants can choose from more than 70 sessions, including case studies, research results, industry panels and strategy discussions on new EDM technologies and applications. Discussion groups and other conference events provide attendees with opportunities to connect with industry peers and Fair Isaac experts, and the InterACT Product Expo reveals Fair Isaac's latest analytic and decision management innovations.

About Fair Isaac

Fair Isaac (NYSE:FIC - News) makes decisions smarter. The company's solutions and technologies for Enterprise Decision Management give businesses the power to automate more processes, and apply more intelligence to every customer interaction. Through increasing the precision, consistency and agility of their decisions, Fair Isaac clients worldwide increase sales, build customer value, cut fraud losses, manage credit risk, reduce operational costs, meet changing compliance demands and enter new markets more profitably. Founded in 1956, Fair Isaac powers hundreds of billions of decisions per year in financial services, insurance, telecommunications, retail, consumer branded goods, healthcare and the public sector. Fair Isaac also helps millions of individuals manage their credit health through the http://www.myfico.com/ website. Visit Fair Isaac online at www.fairisaac.com.

Statements Regarding Forward-Looking Information

Except for historical information contained herein, the statements contained in this press release that relate to Fair Isaac are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including risks described from time to time in Fair Isaac's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2005, and its quarterly report on Form 10-Q for the period ended December 31, 2005. Forward-looking statements should be considered with caution. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Fair Isaac's results could differ materially from Fair Isaac's expectations in these statements. Fair Isaac disclaims any intent or obligation to update these forward-looking statements.

Fair Isaac, ScoreNet and Blaze Advisor are trademarks or registered trademarks of Fair Isaac Corporation, in the United States and/or in other countries. Other product and company names herein may be the trademarks of their respective owners.
Contact:Fair Isaac Corporation
Brian Kane, 612-758-5232
briankane@fairisaac.com
Source: Fair Isaac Corporation

Fair Isaac's reaction to Vantage Score System

Fair Isaac's reaction to Vantage Score System

Heard about the new Vantage Scoring System? It's scheduled to be rolled out by the credit bureaus later on this year. This was posted on our discussion boards by a Fair Isaac employee (Fair Isaac created the existing model the credit bureaus use). The post can be found here. Yes, I believe the poster is an actual employee.

Before I share this info... Yes I am a Fair Isaac employee. And yes I obtained prior approval from our PR dept before posting this. This document was posted on our Intranet site last week.

March 23, 2006
FREQUENTLY ASKED QUESTIONS

BACKGROUND
On March 14, 2006, the three national credit reporting agencies, Equifax, Experian and TransUnion, jointly announced the creation and availability of VantageScore, a new credit risk score. According to their announcement, the new score was developed through a collaborative effort by all three credit reporting agencies. The score is being independently marketed and sold through each of the three credit reporting agencies via licensing agreements with VantageScore Solutions, LLC, a company that the agencies have established. The following FAQ provides answers for use by Fair Isaac employees to the most common questions directed to Fair Isaac in the days immediately following their announcement.

Q: Did Fair Isaac help develop the new score?No. Fair Isaac was not involved in the development of the new score, and any questions regarding VantageScore from sources outside of Fair Isaac should be directed to Equifax, Experian and TransUnion.

Q: Who has more experience in credit bureau-based risk scoring, Fair Isaac or the credit reporting agencies?Fair Isaac has the most experience. Behind our FICO® scores’ unsurpassed performance is 50 years of analytic expertise and 25 years of analyzing credit reporting agency data. We developed the first credit risk score in 1958, the first credit reporting agency score models in 1981, and launched the first general-purpose FICO score in 1989. Our analytic scientists have the most experience studying the nuances of data, allowing us to make the scores more powerful with each redevelopment.

Q: Is there a market for the new score? At this point, we don’t know enough about the underlying science of the new score to comment in detail.However, the ongoing – and growing – success of the FICO score demonstrates that Fair Isaac is already meeting the market’s demand for a consistent measure of credit risk across the three credit reporting agencies. FICO scores have been available since 1989 and are used by most lenders when making billions of credit decisions annually. FICO scores are routinely tested and have become relied upon by lenders, rating agencies, the Wall Street community and a growing base of consumer advocates and personal finance experts. Fair Isaac credit bureau risk scores provide a common language for risk in many industries, including consumer credit, commercial credit, mortgage and telecommunications. They are endorsed or used by such industry-leading organizations as Fannie Mae and Freddie Mac for secondary mortgage lending, and Standard & Poor’s and Fitch IBCA in the rating environment.

Q: Will the introduction of the new score hurt Fair Isaac?We are confident that, provided a choice, lenders will continue to rely upon FICO scores to make the most objective, fair and profitable risk management decisions. Competition has been a fact of life in our industry, and the individual credit reporting agencies have attempted in the past to compete with Fair Isaac by offering scoring alternatives. Yet, FICO scores have continued to be used by the vast majority of banks and lenders in the United States to make the smartest possible lending decisions and grow more profitable. This is the first time that the credit reporting agencies have coordinated their efforts to develop a new risk score and we will monitor lender reactions and take all steps necessary to ensure Fair Isaac remains lenders’ scoring system of choice.

Q: Will the new score replace FICO scores in lenders’ risk evaluation process?Based on what we know now, as long as the market is free from competitive restraint, competition from FICO scores (both Classic and NextGen) will be significant because FICO scores have widespread acceptance by consumer lending and securitization users, as well as acceptance by key regulatory bodies as reliable. Their confidence in FICO scores is the result of the FICO score’s proven predictability and Fair Isaac’s continuous work to update and fine-tune our scoring models to ensure the most precise risk predictions and score explanations possible. Lenders and regulators also value our neutrality in the credit data industry and our ability to objectively analyze and utilize credit bureau data – which differs from bureau to bureau – to generate highly predictive, reliable risk scores.

Q: Does the introduction of VantageScore signal a breakdown in Fair Isaac’s relationship with its credit reporting agency partners?No. Even as our partners introduce VantageScore, Fair Isaac is working with each of the three credit reporting agencies to continue delivery of billions of FICO® scores annually to lenders and other businesses. And we are planning to introduce additional products that Fair Isaac is developing in collaboration with the credit reporting agencies. Of course, we cannot speak to the intentions of the credit bureaus.

Q: How does the new score’s scale differ from the FICO scoring scale?According to the credit reporting agencies, their VantageScore uses a numeric scale of 501-990, and also a parallel alphabetic scale that classifies consumers into fixed A, B, C, D, F scoring 2 grades. These alpha grades strongly suggest that all lenders agree on levels of risk in neat, permanent scoring bands, which is contrary to Fair Isaac’s long experience with lenders. Again, we cannot comment on a system we have not yet seen. However, Fair Isaac can say that the FICO scale has served lenders and consumers well for decades, and is increasingly being understood and accepted by consumers as the standard score range. The classic FICO score uses a numeric scale of 300-850 that is well understood and accepted within the financial services industry and regulators. Most lenders’ strategies and securitization decisions within this industry are geared toward the use of the FICO score ranges and consumers. A new, different score range could create confusion for consumers and lenders alike.

Q: What does this different approach mean for consumers?At this stage, we don’t know enough about the new scoring system to comment in detail. However, a number of consumer groups, including Consumer Federation of America, have expressed the concern that the introduction of VantageScore adds confusion to a marketplace already filled with consumer misperceptions about credit scoring. Today, consumers can view their FICO credit scores and be confident that the scores are an indication of how most lenders view their credit risk. We will continue our efforts to help consumers understand that FICO scores are the same scores most lenders use now – and will continue to use – to make their lending decisions. myFICO.com is the one place where consumers can access their FICO scores across multiple credit reporting agencies and receive education from Fair Isaac on managing their credit scores.

Q: The three companies say this new score was developed in response to client demand. Have lenders been asking for a new scoring system?No. Fair Isaac stays in close contact with all the major U.S. lenders, and none of them have reported to us a desire for a new scoring system. Originally introduced in 1989 and available from all three credit reporting agencies since 1991, our FICO® scores have provided the same consistent and highly effective predictive power regardless of the credit reporting agency providing the data. We have regularly updated and improved our FICO scoring models in response to open feedback from major lenders.

Q: The bureaus claim that the new score uses the same scoring model across all three credit reporting agencies. How is the FICO score approach different?Each of the credit reporting agencies deploys the Fair Isaac scoring model design for Classic FICO scores and NextGen FICO scores. We believe our design utilizes the most predictive elements at each of the agencies to ensure highly predictive performance at each of the agencies – and to ensure that lenders can trust that a 680 FICO score generated on one bureau’s data 3 indicates the same relative level of risk as a 680 FICO score on another bureau’s data. Fair Isaac believes that every FICO score should be as predictive as possible based on the available data.

Q: How will the introduction of the new score impact myFICO.com?We have confidence that myFICO.com will continue its impressive growth as consumers understand that FICO scores continue to be the scores that most lenders use to make credit decisions. In fact, in the days after the bureaus introduced their new score, myFICO.com marked its top two revenue days in the history of the service.

Fair Isaac Statement Concerning Forward-Looking InformationExcept for historical information contained herein, the statements contained in this document that relate to Fair Isaac, including statements regarding its FICO score offering and the benefits to be derived from the offering, are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including issues involving the marketing and distribution arrangements for Fair Isaac’s products, any unforeseen technical difficulties related to the implementation, use and functionality of Fair Isaac’s product offerings, the risks that customers will not perceive material benefits from the offerings, failure of the products to deliver the expected results, the possibility of errors or defects in the offerings, regulatory changes applicable to the use of consumer credit and other data, and other risks described from time to time in Fair Isaac’s SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2005, and quarterly report on Form 10-Q for the period ended December 31, 2005. Forward-looking statements should be considered with caution. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Fair Isaac’s results could differ materially from Fair Isaac’s expectations in these statements. Fair Isaac disclaims any intent or obligation to update these forward-looking statements.

Fair Isaac and FICO are registered trademarks of Fair Isaac Corporation, in the United States and/or in other countries. Other product and company names herein may be the trademarks of their respective owners.

Editor's take on this: Fair Isaac is very worried about this. And further more, I'd say that the Vantage system is an attempt of the Big 3 to break free of the Fair Isaac stranglehold on the credit scoring system. I'm sure the licensing of the credit scoring model developed from Fair Isaac is VERY expensive. I'd say a little competition is a good thing, but who knows how accurate the Vantage scoring system is. What kind of data do the credit reporting agencies have to back up the validity of their models?

Will consumers by hurt by it? Who will use it? Is it an attempt by the big 3 to stop lawsuits from those unfairly damaged by the system currently used by Fair Isaac, over which they have no control? I'd say there are more questions than answers at this point.

ABOUT THE POSTER: Robert Paisola is an international motivational speaker, trainer and author. He is an expert in the field of Personal Real Estate Investor Training. He is a professional speaker who has been featured on CNN, CNNFN, and the Wall Street Journal. He can answer your questions on the "Basics of the Real Estate Investing Business" to detailed issues regarding your specific transactions. Life Experience Robert Paisola is a Professional International Seminar Speaker in the Areas of Real Estate Investing, Tax Lien Investing, Rental Property Management, Real Estate Coach and Mentor Training and Business Management. He has served companies throughout the world. If you are interested in learning the business from someone like Rob email his office at mailto:robert@trumpworldwide.com or call our offices Nationwide toll Free at 1-877-517-9555 or visit http://www.allexperts.com/displayExpert.asp?Expert=38419 or visit www.RobertPaisola.com