Monday, June 29, 2009

The Washington Post has an excellent article on the greater role credit scores are having in the financial fortunes of consumers all around this country. As banks are making it increasingly harder and harder to get a loan, they are demanding higher credit scores. But the economic crisis – rising unemployment and falling real estate prices -- have sent credit scores plummeting and consumers are having a harder time than ever getting loans.

For other consumers, it’s not that they aren’t able to get loans, but the banks are closing down existing accounts and slashing credit lines in order to mitigate their risks. Millions of Americans have used up most of their credit which left them maxed out, which lowers their credit scores even more.

And then add confusion to this crisis by not allowing consumers to know what their credit scores are or how calculated and how lenders actually use them to evaluate the credit worthiness of their potential borrowers. From The Washington Post article:

The FICO score, which was developed by a company formerly known as Fair Isaac, is the dominant player in the industry. It is calculated based on the information contained in credit reports, which list a consumer's debts and payment history. Three bureaus -- TransUnion, Experian and Equifax -- keep those credit reports.

However, to compete with the FICO score, the three bureaus united in 2006 to create VantageScore, which ranges from 501 to 990, which they sell to lenders.

Complicating matters is that Experian and TransUnion have developed their own scores, which the agencies call educational scores because they are intended to help consumers gauge their own creditworthiness. Lenders cannot even buy Experian's score. They can buy TransUnion's but tend to go with the FICO score instead.

On its Web site,, Experian gives people their Plus score if they pay $14.95 a month for a credit-monitoring service, which they can cancel after a seven-day trial period. They have to dig through the terms and conditions before getting to this disclosure: "The PLUS Score is not a so-called FICO score, and may differ for a variety of reasons."

TransUnion also offers a $14.95-a-month credit-monitoring service with a 30-day trial period on That gives consumers access to the bureau's scores. Like Experian, TransUnion discloses on its Web site that its score is not the same as a FICO score.

Equifax gives FICO scores to anyone who pays $14.95 a month for its credit-monitoring service.
Susan Henson, a spokeswoman for Experian, said the educational scores are still a good tool for consumers even if they are not what lenders use.

"The most important thing is they're really measuring the same thing, which is that consumer's level of risk, whether they are an extremely low-risk consumer or whether they are a high-risk consumer," she said.

But some consumer advocates say the educational scores are of little use and too expensive.
Ulzheimer likens them to faux designer bags. "It's like selling a Gucci bag on the streets of New York," he said. It looks like the real thing, but it's not.

"It exposes something two of the three bureaus don't want people to know," he added. "They make a whole lot of money selling scores."

For those of us who use The Credit Secrets Bible, this last bit on the "faux credit scores" that are being sold by these Websites comes as no surprise. The Credit Secrets Bible has been making this information on this expensive hoax being perpetrated on the public for years.

While The Washington Post article makes it appear that consumers are completely at the mercy of the credit bureaus, this is false as well. Education is empowerment and the information you will get from The Credit Secrets Bible will put most consumers back in the driver's seat when it comes to their credit.

You can order The Credit Secrets Bible here with a full 90-Day Money Back Guarantee:

The Official Credit Secrets Bible

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