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12/18/02
- Consumer Federation of America study
Now (since you're
sweating your score), here's Fair, Isaac with A credit
score: A great gift this
Christmas!
- Michigan
- Commissioner, Office of Financial and Insurance
Services: "The Use of Insurance Credit Scoring in
Automobile and Homeowners Insurance - A report to the
Governor, the Legislature and the People
of Michigan"
- Battle Creek Enquirer: "Credit-score information
is needed" - "We still don't understand the correlation
between a person's credit rating and their insurability as a
motorist, but at least now the state will provide us with some
of the tools we need to learn more."
- Holland Sentinel: "Insurance credit scoring data to
be available online, by
phone" - "
- Detroit Free Press: "Agency sets rules for
insurance rates - Companies using credit scores to determine
cost must inform customers" - "All consumers really lack
meaningful information about insurance credit scores,"
Fitzgerald said."
- Forbes: "Five Ways To Combat Rising Insurance
Rates" - "The standard joke is that Realtors used to worry
about whether their clients could qualify for a mortgage. Now
they worry about whether they qualify for insurance"... "It
isn't always fair, and it's often controversial, but all the major
insurers use such systems, so it is helpful for you to get a look
at your own score to learn what you're up against."
11/23/02 Updates
- Fair, Isaac: "TransUnion
FICO® scores available to consumers through myFICO" -
"'The initial products we created with Fair, Isaac represent a
major step forward in our ongoing efforts in consumer credit
empowerment,' said Harry Gambill, TransUnion CEO."
The big question: Did he say that with a straight face?
See Case 2,
creditaccuracy.com for his real ongoing efforts.
More  "TransUnion's
leadership in consumer credit information and education,
paired with Fair, Isaac's leadership in analytics, sets the stage
for us to create new useful tools for consumer credit empowerment
in the U.S."
Empowerment. OK, whatever. The spinning is
just beginning.
See the "education" this
lady got.
- Forbes.com: "The man who knows too much" - "Fair,
Isaac's Tom
Grudnowski leads a team of math whizzes who help companies learn
everything about your
credit history, buying habits and what you're likely to do
next. Should he be stopped?"
- 2001: "Fair, Isaac director leaves with a bang" - "In
an extraordinary resignation letter, a longtime Fair, Isaac &
Co. director and retired executive said the San Rafael-based
company would be best served without President and CEO Tom
Grudnowski at the helm, and it
should be sold."
- BusinessWeek: "Fair Weather for Fair Isaac" - "The
company influenced over 25
billion transactions in fiscal 2003. From September, 2001, to
August, 2002, if you had a credit card, used an ATM, had a cell
phone, received a marketing call, got injured in a car accident or
on the job, or bought a car or house, chances are Fair Isaac was
involved and got paid accordingly."
- Liz Pulliam Weston: "But unlike 'hard' inquiries -- those made
by lenders when you apply for credit -- inquiries
made by insurers, and by you when you want to see your own
credit history don't hurt your FICO score."
11/01/02
Updates
- Freddie Mac
- Washington Post: Suit Against Freddie Mac Focuses
on Consumer Protection - "The class action suit against
Freddie Mac charges that hundreds
of thousands of home loan applicants nationwide have been
rejected or assessed higher fees through the corporation's
electronic underwriting system without receiving the required
notices and protections afforded to them under the Fair Credit
Reporting Act."
- Realty Times: "Weidman's "class" of
similarly-affected applicants— borrowers who would receive
monetary damages if the suit is successful— includes all
mortgage applicants who were quoted a higher rate or rejected
through Freddie Mac's Loan Prospector system during the past two
years."
- Fannie Mae
- Realty Times: Fannie Mae Sued For Alleged
Discrimination Against Minority Borrowers - "Rahmaan's suit
asks the court to bar Fannie Mae from "using or relying on racially
discriminatory credit scoring systems" and from purchasing
loans underwritten by such systems."
- Reuters:
Former HUD official Allen Fishbein said that
without speaking of the merits of the Rahmaan lawsuit, lack of
knowledge about the automated underwriting systems could lead
borrowers who have been denied a loan to question its
fairness. Given how broadly it is used to determine whether
individuals qualify for loans, the government would do well to
review the system, he said.
- Washington Post: "Freddie Mac had no immediate
comment on the suit, but a spokeswoman, Sharon McHale, said the
1999 study underlined 'the disparities that exist in credit
histories' among racial groups and 'showed the need for better
credit
education in minority communities.'"
"The complaint cites a 1999 study by Fannie Mae's rival
mortgage investor, McLean-based Freddie Mac, as demonstrating
that the 'raw credit data upon which the entire scoring system
is based is undeniably skewed by race.'"
From 1999:
Singletary further remarked that the news of the
Freddie Mac survey had made blacks
the brunt of media mockery, quoting a joke made by
"Politically Incorrect" host Bill Maher during one of his
recent opening monologues: "A survey of credit showed that 48
percent...of African Americans have bad credit. And also,
they're not thrilled about the term 'Mastercard.'" Singletary
responded, "Ha. Ha. I'm laughing so much it
hurts." 10/26/02 Updates
10/25/02 Updates
- Equifax / ChoicePoint
- "For the first time ever, you can purchase the same
insurance score used by hundreds
of insurance companies."
- "Atlanta, OCT. 22, 2002 - Equifax Inc. (NYSE:EFX),
today announced it has teamed with ChoicePoint (NYSE:CPS) to
provide consumers with the scores most often used by auto and
homeowner insurance underwriters... 'We've worked with industry
and government leaders for nearly two
years to find a way to give consumers easy access to their
own insurance information,' said Derek V. Smith, ChoicePoint's
chairman and CEO."
- "The Americans will always do the right thing— after they've
exhausted all the alternatives." - Winston Churchill
- Farmers Insurance
- Texas Governor, AG: Gov. Perry, Attorney General
Cornyn Announce Deceptive
Trade Lawsuit Against Farmers Insurance- "Farmers
Insurance has used credit history as a significant factor in
setting premiums, without disclosing to its policyholders the
adverse impact of doing so. In addition, the company’s use of
credit scoring constitutes illegal discrimination based on how
the credit history for policyholders is used to calculate
premiums."
- Farmers Insurance: Farmers Insurance Announces Non-Renewal
of Texas Homeowners Insurance Policies-- TDI's Recent Resolution
Offer Reveals State's Lack of Understanding, Unwillingness to
Negotiate.
9/7/02 Updates
- The Washington Post: Air Security Focusing on Flier
Screening, by Robert O'Harrow Jr., Washington Post Staff
Writer
Their mission was to demonstrate how artificial
intelligence and other powerful software can analyze passengers'
travel reservations, housing information, family ties,
identifying details in credit reports and other personal data to
determine if they're 'rooted in the community' -- or have an
unusual history that indicates a potential threat... HNC
Software, now a part of Fair,
Isaac & Co., won the largest grant, $551,001.
- BusinessWeek: How Fair Is Fair Isaac?, By Jane
Black - "The increase was a surprise because neither Alexander nor
her husband, Larry Jackson, had been in an accident or placed a
claim at any time during their six
years with Pemco."
- Mailbag:
From: xxxx@xxxx
To: "'gfisher@erinet.com'"
Subject: Credit Score Letters
Date:
Fri, 6 Sep 2002 19:00:41 -0400
I can't believe I just sat here and read the ENTIRE transcript
of your battle. It's hilarious though :-D I'm glad there is
someone out there that has the time, patience, and intelligence to
stand up to the Credit Bureau Bullies! Keep it up...
Thank you.
The story continues in Part Two, in real
time, now. See http://www.creditaccuracy.com/cases.htm
and http://www.creditaccuracy.com/0002.htm.
Other
readers' comments
- AARP Public Policy
Institute: CREDIT SCORES AND MORTGAGE LENDING -
"However, as the use of credit scores continues to expand, issues
relating to consumer access to credit scores, the cost to
consumers for this access, the consistency of credit scores, and
the accuracy of credit scores will continue to be raised."
- Chicago Tribune: Credit record and score: They're
not the same, by Marilyn Kennedy Melia
Consider, for instance, this recent query from a
reader: "In order to take control of my finances, a few years
ago I canceled my credit cards and worked with a debt management
service in order to get the interest rates reduced and to pay my
monthly fees through this service. This has been very successful
in reducing my debt, but I recently applied for a mortgage and
was told that doing this has affected my credit score similar
to a bankruptcy ... Is this true?"
- References to The Credit Scoring Site
- HowStuffWorks.com: "More Great
Links: The Credit Scoring Site"
- Consumer Credit Counseling Service of Nebraska: "Then
move to the Internet for in depth information... Credit and
Credit report topics--- ... creditscoring.com"
- Kansas.com/Wichita Eagle: If you want more
information about credit reports and credit scoring, visit
www.creditscoring.com
or www.fairisaac.com.
- www.transunioninsurance.com - You can blame TransUnion;
according to them, they pioneered it.
- "Less than a decade ago, TransUnion proved the correlation
between financial behavior and risk profile, pioneering the
use as a solution provider for the insurance industry. Today, we
are a leading provider of in-depth financial behavioral data and
the driving force behind the most sophisticated risk evaluation
and lead generation tools. Our data-based solutions have
literally reshaped the industry... lowering loss ratios, and
increasing efficiency for the nation's top insurers." (see the
search for what TransUnion "proved")
- Four reasons (sounds familiar): "ASSIST delivers up to four
reason codes with each score, helping customers, agents and
regulators,alike, understand the reasons behind each score used
as part of an underwriting decision. We also provide an
informative educational program that makes it easier for you to
do business in states where disclosure
of underwriting criteria is required."
- Letter to Nolo: "I recently applied for a loan to buy a
house and was rejected because my credit score was too low. I had
no idea I even had a credit score! The lender
told me that the score doesn't show up on my credit report.
How can that be?"
8/20/02 Updates
- In Congress: H.R.3607 - "Protecting Our
Communities From Predatory Lending Practices Act (Introduced in
House)" (1 cosponsor)
(g) DISCLOSURE
OF CONSUMER'S CREDIT SCORE REQUIRED- If a creditor obtains or
calculates a credit score of any consumer in connection with
any consumer credit transaction, or any application or
solicitation for any consumer credit transaction, which is or
is to be secured by the consumer's dwelling (without regard to
whether the transaction is consummated), the creditor shall
disclose, in writing--
`(1) such credit score to the consumer; and
`(2) the methodology used for the evaluation of the
credit score, including the statistical basis for the
calculation of the consumer's credit score from the credit
history of the consumer.
- California
Laws
- The Third Consumer Credit Reporting World Conference,
October 20-22, 2002, Sydney, Australia (previous venues: San
Francisco! Rome! Maybe Dayton,
next!)
- On the Big Agenda
at the Big Meeting: "Disclosure and marketing of credit
reports/scores to consumers" presented by (mystery guest (hot
potato)).
- (use the MIDI "Lights! Camera! Action!" for background (mood) music
") Hey, Kids! What luck-- our favorite stars, all in one great
show!
Send an email
commitment for $1! If there's enough response,
we'll find some respectable
independent company to take the money so you know it isn't going
for plane tickets or a dinner cruise (and, saaaaaay! Is Georgetown U. on
a break that week?-- now, would that be a convenient Outback
working vacation,
or what?)! With $3000, we can sponsor
a full-page ad in the conference notes and space on the web
site!
Come on! It'll be fun! In the ad, we'll ask the U.S. credit
bureau association (aka "The Barry and Stuart Show") why it
won't make any more replies to the email
at creditaccuracy.com. And, we'll ask the chairman
what the deal is with Case 2!
OK-- if the credit bureau's association sponsors a
conference in Australia, and they get their money from the
credit bureaus, and the credit bureaus get their money from
you... Come on credit boys: Who's your daddy?
8/14/02 Updates
- In the U.K.: It doesn't mean much to us in Britain -
yet.
But every American needs to know their 'score' - "Their
infobanks are vast but notoriously flawed."
- Dallas Morning News: "After inquiring about the
increases, she was told that rising mold damage claims across the
state were a big cause... But she was stunned when her agent cited
another
factor – her credit history."
- Handbook of
Credit Scoring edited by Elizabeth Mays
8/11/02 Updates
- Happening now, in real time. Case 2 of Part
2, creditaccuracy.com: Dirty Data (It's a three-act play: "The second act, the middle, holds
the dynamic,
dramatic and surprising conflicts and tensions introduced in
the first act and resolved in the third act.")
- creditscoring.com is recommended in Nolo's manual:
Credit
Repair, 5th Edition, Sep '01
- Big story: TransUnion Releases Its FICO Score, but
forgot to tell anybody. Score page is within myfico.com domain.
- FICO vs. Fake-O (Why would anybody want the "TransUnion
score," now?)
- FICO score news on TransUnion's press release page
- missing.
- TransUnion news on Fair, Isaac press release page
- missing.
- Fourth step in online ordering process: "Choose
Your Score" (only if you really want to see the choice page--
click on "Order and View Online," "order now," and "Agree.")
- TU Q&A
Question: "Where do I pick up my TransUnion
Credit Report and FICO Score order?" "Where's my FICO
score?"
Answer: "1. Go to
https://www.tuscores.com/login.jsp... "
Question: "How long can I access my TransUnion
credit report and FICO Score online?"
Answer: "Your
TransUnion credit report and FICO Score® can be accessed
online, 24-hours-a-day for a period of six
(6) days from the date of your purchase."
- Fair, Isaac plays Equifax and TransUnion: myfico.com
home page still boasts that the Equifax service is exclusive:
"[Equifax's] Score Power™
is the only
consumer service that delivers FICO scores – the world's leading
credit scores, used in billions of credit decisions a year."
- The Inquiry Inquiry - Everybody's got an opinion
- Already dubious history tainted by controversy
- The Credit Scoring Site reported:
Trans Union and and Fair, Isaac found a flaw in
their practice of lowering scores based on "inquiries"
(people accessing your credit report). "Fair, Isaac found it
could increase the operational effectiveness while reducing
the volatility of the score due to inquiries." They always
make the simplest
things sound so important.
- The Gartner Factor
- Gartner Says Online Lending Industry Needs to Correct
Credit Scoring Methods - Internet Users Can Damage
Their Credit Scores by Inquiring About Loans Online
- Fair, Isaac's immediate response: "So far what we have
from Rasha is an interesting anecdotal
possibility."
- Fair, Isaac getting grilled in Washington: "This
has been a topic of some controversy."
- Experian:
Dear SHB,There are two types of inquiries on your
credit report:
- those resulting from your application for credit
- those resulting from prescreening or account
monitoring
Inquiries are divided into two sections on
your credit report. Creditors can see only inquiries resulting
from your application for credit...
- TransUnion (formerly Trans Union):
Question: Does every inquiry affect my
score?
Answer: No, the only inquiries that may
affect your credit score are those initiated
by you for specific credit transactions, including
mortgage, credit card and auto applications . The score does
not include inquiries when:
- A credit grantor has received your name and address
information for the purpose of offering you credit.
- A
credit grantor with who you have a business relationship has
posted an account review inquiry (requests made by lenders to
review your account with them).
- An authorized potential
employer has received your credit report.
- You have
received your personal credit report.
- Equifax:
What does BEACON® Fair, Isaac ignore?
- Your race, color, religion, national origin, sex, or
marital status
- Your age
- Your salary, occupation, title, employer, date employed,
or employment history
- Where you live
- Certain types of inquiries such as promotional, account
review, insurance or employment related inquiries
- Any information not found in your credit report
- Any information that is not proven to be predictive of
future credit performance
- Fair, Isaac:
Does every inquiry affect my score?
No.
FICO scores only consider inquiries initiated
by you for business purposes. These include mortgage
applications, credit card applications and auto loan
applications. If you order your credit report from a credit
reporting agency — such as to check it for accuracy, which is
a good idea — the score does not count this, as it is not an
indication that you are seeking new credit. Also, the score
does not count requests a lender has made for your credit
report or score in order to make you a "pre-approved" credit
offer, or to review your account with them, even though you
may see these inquiries on your credit report.
- The Equifax/Fair, Isaac syndicate:
FICO scores consider a wide range of information
on your credit report. However, they do not consider:...
... Certain types of inquiries (requests for your credit
report).
The score does not count "consumer-initiated"
inquiries — requests you have made for your credit report, in
order to check it. It also does not count "promotional
inquiries" — requests made by lenders in order to make you a
"pre-approved" credit offer — or "administrative inquiries" —
requests made by lenders to review
your account with them. Requests that are marked as coming
from employers are not counted either.
Your score takes into account:...
... How many recent requests
for credit you have made, as indicated by inquiries to the
credit reporting agencies.
Inquiries remain on your
credit report for two years, although FICO scores only
consider inquiries from the last 12 months. Note that if you
order your credit report from a credit reporting agency — such
as to check it for accuracy, which is a good idea — the score
does not count this, as it is not an indication that you are
seeking new credit. Also, the score does not count requests a
lender has made for your credit report or score in order to
make you a "pre-approved" credit offer, or to review your
account with them, even though you may see these inquiries on
your credit report.
... Length of time since credit report inquiries were
made by lenders.
(from the List of FICO Score Factors):
Search
for and acquisition of new credit
- Number of recently opened accounts, and proportion of
accounts that are recently opened, by type of account
- Number of recent credit inquiries
- Time since recent account opening(s), by type of account
- Time since credit inquiry(s)
- Re-establishment of positive credit history following
past payment problems
7/14/02 Updates
- "The Experian National
Risk Model"
Someone's always playing corporation games
Who cares? They're always changing corporation
names
- Starship
6/16/02 - creditscoring.com update: "'The
Experian National Risk Model's exclusive score range of 0
to 1,000 (low score equals low risk), translates directly
into statistical probability.'" (the Internet address
experian.com/catalog_us/models_consumer/nationalrisk.html
is now dead)
7/14/02 - Remnants: A Google search returns
the same dead link. Experian gives the "Scoring and Modeling" list
without the "National Risk Model."
1/30/02 - Experian:
"The National Risk Score is used by lenders across the nation.
We have altered
the scale to make it easier to compare to other well-known
models."
Taking up shelf space: Scorecard
vs. CreditExpert
We gotta get organized.
Experian, drop your score. The FICO/Equifax cartel cleaned your
clock and you are just trying to confuse people by distributing
your Fake-O like the FICO. You even gave yours the same price
($12.95) and changed its scale (from 0-1000 (which actually made
sense) to 340-820 (huh?)) so it looks like a FICO range number.
Come on, does it really have exactly the same monetary value as
the Fair, Isaac score? If you had any pride, you would charge
more. The only way you are going to compete effectively is to come
up with a completely unique mousetrap.
Stop playing games.
- Rankled - Mortgage Bankers Association to Federal Reserve:
"This
statement is generally inaccurate... "
Federal Reserve: "In July, an
addendum to the third installment (PDF 384KB) was published to
include comments from the Mortgage Bankers Association of
America."
To: linda.a.aubuchon@stls.frb.org
From: Greg Fisher
Subject:
"PERSPECTIVES ON CREDIT SCORING... " missing information
The "SUPPLEMENT TO THE THIRD INSTALLMENT OF A
FIVE-INSTALLMENT SERIES" ("PERSPECTIVES ON CREDIT SCORING AND
FAIR MORTGAGE LENDING") document on your web site appears
incomplete, ending with "In the latter case, the pro-" on page
five, as if there are actually six or more pages.
http://www.stls.frb.org/caffairs/pubs/addendum3.pdf
Will you publish the rest of the document?
6/28/02 Updates
- Kenneth Harney: Data-Correction Services Help
Borrowers Hurt by Wrong Scores - "Could the presence of unseen
bad data in your files cost you two
or more percentage points -- and potentially tens of thousands
of dollars in higher monthly payments -- on your home loan?
Absolutely."
- Newsweek, July 1 edition: Credit: The Real Score -
Finding out your financial rating - "Instead of feeling like a
blue-chip stock, suddenly I was more like a walking junk bond...
And if you’re going to be shopping for a loan, it may be worth
checking your score six months
ahead of time, since it could affect the interest rate you
pay."
- déjà vu - Insurance Credit Scores: "... a crypto-secret
buried
in a vault beneath the earth and if they reveal it to you they
have to kill you."
6/16/02 Updates
5/29/02 Updates
- May 21, 2002: Fair, Isaac and Equifax Give Consumers New
Score Power Tools Offering Greater Insights for Managing Their
Credit Health - Enhancements Include First-Ever FICO Score
Simulator
"'Offering consumers additional insight into credit
scoring is yet another example of how we are
demystifying credit reports, scores and the other tools
lenders use,' said Virgil Gardaya, general manager of consumer
services at Equifax." Equifax, 1997: "Um, it's
proprietary information and we
wouldn't give it out."
- In Washington state: "Credit scoring is simply a form
of financial discrimination," said Sen.
Margarita Prentice, D-Renton, the bill’s prime sponsor. "Even
if you’ve always paid your bills on time and never had a traffic
ticket, your insurance company can cancel your coverage – or
double your rates."
- Insurance: Parting Shots: The Real Truth About Credit
Scoring - "Chris Pummer with CBS MarketWatch reported that the
California Department of Motor Vehicles did a study 30 years ago
that showed people
with dark hair had significantly worse driving records than
those with blonde or red hair."
- USA Today: Don't let your credit score strike you
out - "More employers are screening job applicants by credit
score. Some landlords
consult them before renting." (5/5/08 update: Credit bureaus do not include scores in pre-employment screening reports.)
- Kansas City Star:
- Credit scores driving insurance rates higher - "He
said although insurers
claimed to be able to show a statistical correlation, 'they
won't show you how they determine it. They say it's
proprietary.'"
- Credit scoring scrutinized in Missouri and Kansas -
"'The consumer does nothing
but lose,' [an agent] said."
- Missouri House delays vote on insurers' use of credit
scoring - "Missouri is one of more than two
dozen states that are considering laws to limit credit
scoring."
- House bill on credit scoring falls short - "Without
credit scoring, her premium was $286 for six months. With credit
scoring, her premium
shot up to $698."
- The Detroit News: Credit scoring
ban sought
- Wisconsin legislature: History of Assembly
Bill 774
- San Francisco Chronicle: Insurers' credit scoring
rankles - "So far, no company has allowed the department to
look into its [black] box, Moore says. Some companies
have withdrawn proposed rates after the department asked to
peer inside."
4/24/02
Updates
- Study by Georgetown University Credit Research Center
utilizing a score you
can't even get (the Trans Union FICO)
- New York Times headline, Sunday, 4/21/02: Borrower
Beware: Credit Scoreres are Watching - The article says Fair,
Isaac bowed to intense public pressure to release score, and that
other credit reporting agencies other than Equifax "concocted"
their own scores to give to consumers.
- Just a reminder: Two thirds of FICO scores are still
secret (Trans Union and Experian).
- Fair, Isaac's latest
- "Now, Thomas Grudnowski, Fair Isaac's chief executive since
1999, is leading the company into another potentially controversial
business: teaching people how to boost their credit scores
and to use them to better advantage." (Same story as in 3/20
updates, different site, different headline)(includes picture of
a guy in the lowest 45th percentile of those scored)
- Inside a Fair, Isaac press [alt, 2014-09-04] release
(Fair, Isaac and Equifax Mark First Year of Delivering
Consumer Credit Empowerment Online): "ScorePower will soon
become an even more empowering tool for consumers with the
introduction of the first FICO® score simulator
for consumers. This interactive feature will help consumers
explore "what if" scenarios online and learn how certain habits
and behaviors, such as opening a new credit card account, could
affect their FICO score over time."
- A new Web site entitled The Truth About Insurance
Credit Scoring
03/20/02 Updates
03/11/02 Updates
- Fair, Isaac: Consumers Now Can Know What Loan
Rate Offers to Expect Based on Their FICO Credit Score at
MyFICO.com
- "National Average Home Lending Rates (APR) by FICO® Score" -
Shows 30-year fixed mortgage loan at 6.526%
with 1.0 point at a score of 720-850.
- Freddie Mac: Weekly Mortgage Market Surveys March
7, 2002-- "In Freddie Mac's Primary Mortgage Market Survey,
the 30-year fixed-rate mortgage (FRM) averaged 6.87 percent,
with an average 0.7 point, for the week ending March 8, 2002, up
from 6.80 percent last week.
- "Those who ignore history are doomed to repeat it."--
George Santayana
- Fair, Isaac, 2001, regarding insurance: "A number
in itself to be disclosed would not be helpful to a
consumer."
- Fair, Isaac, 1997, regarding lending: "... The score
itself is
not helpful to the consumer for several reasons..."
- Channel 13, Indianapolis: "What's most frustrating,
Gilliam said, is that she's never filed an insurance claim, and
she hasn't had a traffic ticket in 14 years."
- A Nebraska state agency: "The Nebraska Equal
Opportunity Commission is interested in investigating insurance
companies that use discriminatory policies and credit scoring
systems that virtually
guarantee insurance will be denied to urban neighborhoods and
people of color."
- In Florida
- State Department of Insurance:
- TASK
FORCE ON INSURERS’ USE OF CREDIT REPORTS IN UNDERWRITING
AUTOMOBILE AND HOMEOWNERS INSURANCE
- “'Credit history, and credit and insurance scores, may be
one way to analyze a particular policyholder,' (Commissioner)
Gallagher said. 'But we need
to make sure it is applied in a fair, non-discriminatory
way.'"
- Florida Insurance Council: DOI Task
Force on Credit Scoring
- 2-11-97 IBAA (congressional) Testimony -
"Reliance on credit scoring methods will result in a credit
cloning process that does not take individual
circumstances into account."
Witness credentials:
- President, Interchange Financial Services Corporation
(holding company of Interchange
Bank)
- Consumer Advisory Council, Federal
Reserve Board
03/4/02 Updates
- Allstate
- In the California senate: "This bill would prohibit an
insurer from using credit ratings, credit reports, credit
scoring models, or credit information to underwrite, classify,
or rate certain automobile and property insurance policies."
- CREDIT SCORING IN UNDERWRITING AND RATING TO RECEIVE
HEIGHTENED SCRUTINY BY INDIVIDUAL INSURANCE REGULATORS AND THE
NAIC - "Representatives from Fair Issac and the Associated
Credit Bureau testified that there was a demonstrable correlation
between poor credit and insurance losses, a correlation that Bob Hunter had vehemently
disputed."
- Utah insurance commissioner: “It is common
knowledge that credit reports are often inaccurate."
- The Credit Scoring Paradox - By "Given recent media
attention paid to the major credit agencies' data integrity
problems, the growing prevalence of "ID theft," and the
rigorous disclosure requirements mandated by new financial
services legislation, insurers would benefit by explaining clearly
how they will use credit information."
- Professional Insurance Association of New Hampshire:
"In fact, the company should be mandated to provide two reasons
they take adverse action against a customer, rather than
reasons the customer was assigned their particular credit
score."
- Chairman, task force, Professional Insurance Agents
Association of Pennsylvania, Maryland and Delaware:
"Unfortunately, as credit scoring use has become widespread in
automobile and homeowners insurance, many deficiencies
and questions have surfaced, including how credit scoring
practices are regulated."
2/26/02 Updates
- (The never-say-die) National Association of Independent
Insurers (NAII) news releases:
- "JUNEAU, Alaska — Two more bills prohibiting
insurers from using credit-based insurance scores were
introduced into the state legislature this week. Both apply only
to auto insurance."
- BOISE, Idaho — A state Senate committee approved Thursday
(Feb. 21) a bill prohibiting
insurers from charging a higher premium or deciding not to
insure a person based primarily on his or her credit rating or
history.
- COLUMBUS, Ohio — Proposed legislation introduced Wednesday
would impede
Ohio insurers' use of credit-based insurance scores and
charge the state's insurance department to study this
widely-used underwriting practice.
- INDIANAPOLIS, Ind. — Political maneuvering is keeping alive
a burdensome
and counterproductive bill that would require Indiana
insurers to obtain prior approval of credit-based insurance
score formulas and force a three-year review of credit history.
- See Washington, New Hampshire, Kentucky, Missouri, etc.
- DES PLAINES, Ill. — As of February 12, 2002, 21
states have introduced bills that would ban or restrict the
use of credit-based insurance scoring.
- Allstate Insurance - an answer for everything:
What does credit have to do with my likelihood of
having an insurance loss?
The link between credit history
and loss potential has been studied extensively by many
scholars outside the insurance industry, in fields such as
psychology, safety engineering, occupational medicine, consumer
research, and risk perception.
Nearly 30 articles and studies that we analyzed point to
various possibilities... Ask
for those studies.
- Channel 2, Orlando: Credit Checks Present Risk To
Ratings - "The sixth car dealer finally clued Mowery into why
each offer continued to get persistently worse
and worse."
2/23/02 Updates
- WashPIRG: Opinion - Credit scoring highly unfair
- "In fact, you could have paid every insurance bill you ever
received on
time and never filed an insurance claim, and you could still
have a bad credit score that would either make you pay
significantly more for insurance or prevent an insurance company
from offering you insurance coverage."
- Channel 7, Denver: Credit Score Could Affect
Your Car Insurance - Check Your Credit Reports To Make Sure
That All Information Is Accurate
- (FICO vs. fake-o) CNN/Money: Five
ways to improve your credit score - Feb. 15, 2002 -
"Consumers may now get their FICO score or a comparable version of
it from each of the bureaus... with TransUnion
your score is automatically included in your report, whether
you get it free or not."
- CNN/Money: What's
your credit score? Three steps to better credit [2 out of
three, at least]
- CNN/Money: (video) Your credit score - January 14,
2002 - "CNNfn's Valerie Morris has details on how that number
is determined and how you can improve it."
Valerie says, "Equifax, by the way, will send you your credit
score for free if you've been denied credit within the last 60
days."
- Experian Scorecard: "Score Simulator - access to our 'what
if' tool for running scenarios on how changing financial
behavior might affect your score."
- Experian, Ask Max: "The National Risk Score is used by
lenders across
the nation. We have altered the scale to make it easier to
compare to other well-known models."
Let's "Ask Max": Max, how many lenders use it? Will you name
25?
- E-Loan: "After being forced
to abandon this effort by Fair Isaac, we successfully lobbied
for legislation to allow California consumers to view their FICO®
score and are working on similar national legislation."
2/21/02 Updates
- "Georgia Insurance Commissioner John W. Oxendine has launched
an investigation into the use of credit scoring by insurance
companies, and has subpoenaed six insurance companies to appear at
his office for a public hearing on October 17, 2001." Hearings
transcripts.
- "Washington State Insurance Commissioner Mike Kreidler has
called for bold measures to limit the use of credit scoring by the
insurance industry, saying the increasingly common practice is
likely hurting
consumers."
- Florida Department of Insurance - Minutes of Task
Force Public Meeting Held On October 30, 2001:
"She contacted the insurer and was informed that the
insurer had run a credit check on her, without her knowledge,
that her premium was being increased as a result of the credit
check, and that if she cleaned up her credit history her rates
would go down."
"The insurer refused to issue the policy, citing Mr.
Goldberg's credit history. He went to another insurer and was
able to obtain the insurance without any difficulty. He has
recently had to change insurers because his agent is no longer
appointed so he contacted Allstate again. Again, Allstate said
it would not issue a policy to him because of bad credit. He
stated he was given no information regarding the credit report
and how he could obtain a copy of the report. He stated he did
not authorize the insurer to use his credit report."
"The premium went up $112 for a six month policy,
with the same vehicle. He contacted the company and the company
indicated that his credit history scores may be involved, and
the company uses credit history to determine the rate increase.
He stated his credit is excellent with no delinquencies and has
had no driving infractions. He was advised that, even with good
credit, he could still have a rating on his credit score that
would lead to a higher rate." The Fair, Isaac
representative "stated that an individual consumer could not
independently gain access to his insurance score from Fair Isaac."
- The
Great Insurance Scoring Debate - "The practice has been in
use for some years now, but the issue was dragged into the
spotlight earlier this year with the release of “Breaking
the Silence,” a study by Conning & Company that looks at
auto insurers’ use of credit scores."
- creditscoring.com again in academia:
University of Nebraska at Omaha Department of Finance, Banking
& Law Commercial Bank Management FNBK 3650-Fall 2001,
Answers to Chapter Problems, Chapter
20
- Loretta J. Mester, Federal Reserve Bank of Philadelphia and
the University of Pennsylvania: "Check out the web site
http://www.creditscoring.com/letters/equifax.htm
for some interesting
reading."
1/22/02 Updates
- Privacy Commissioner of Canada:
"I've heard a lot of the arguments about why credit scores
should not be released to consumers. You might as well know that
so far I'm not persuaded by them."
"That is personal information. As such, consumers have a
right of access to it under the act."
"Yours is an industry that has received its share of
criticism from consumer advocates and privacy people. This new
legislation gives you a chance to get
with the program."
- insure.com: auto insurance - How your credit history
affects your auto and home
insurance premiums
- Federal Reserve:
- THE THIRD INSTALLMENT OF A FIVE-INSTALLMENT SERIES
- "The purpose of the Federal Reserve System’s Mortgage Credit
Partnership Credit Scoring Committee is to collect and publish
perspectives on credit scoring in the mortgage underwriting
process, specifically with respect to potential disparities
between white and
minority homebuyers."
- THE FOURTH
INSTALLMENT OF A FIVE-INSTALLMENT SERIES
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