March 16, 2010
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FICO Encourages Treating CC Consumers Better, Pt.1
Where's that free FICO score?An individual's credit score is determined by a variety of elements such as: Late payments, Amount of available credit, and Number of active credit card and loan accounts. Although Americans are entitled by law to a free copy of their credit report each year, the entitlement does not include their credit score. In order for an individual to obtain his score, it will cost. The Financial Times recently reported that that The Fair Isaac Corporation (FICO) is advocating that financial institutions should freely share FICO scores to their clients and credit card customers. FICO believes that financial institutions, who have received a great deal of scrutiny and criticism over the past months, may be able to win back their customer's trust. Of course, that remains to be seen. Credit card customers have been very open about how they feel towards the financial industry. Their attitudes have been supported by significant reduction in the use of credit spending.
A spokesperson for the FICO said that only 5 percent of Americans have accessed their credit scores. Furthermore, the company believes that number could raise as high as 75 percent of the credit card customers and consumers that would have access to their credit scores if just the top ten credit card companies and financial institutions would share their customers scores.
In 2008, Washington Mutual, now owned by JP Morgan & Chase, conducted a study with the Consumer Federation concluded that the Americans could save an additional $105 annually if they were able to raise their credit scores by 30 points. As such, overall U.S. consumers could potentially save over $28 billion. At that time, Washington Mutual freely shared credit scores with their customers, but since being taken over by the credit card giant, Chase, the practice has ceased. The simple truth is that the FICO credit score is not the only credit score available. It is however, one of the most significant. To learn more about other scores available, continue to part two of this series.