Fair Isaac's Mr. Quinn's statement in response to my small claims suit

November 19, 2001

Christine Baker
(address deleted)

Dear Ms. Baker:

This letter supplements Fair, Isaac and Company, Inc.'s ("Fair, Isaac") answer to the claim you filed against Fair, Isaac in the Justice Court of Mohave County, AZ, Small Claims Division. We hope that this letter will answer the concerns you raised in your claim, and later in your conversation with our helpline personnel, by explaining some details of how our models capture data in your credit profile. However, as you will see below, we do not have enough information to respond fully to the issues you raised in your October 4 letter to planetfeedback.com.

1) Background on Fair, Isaac credit bureau scores

Fair, Isaac is the developer of the most widely used credit scoring models. Similar, but not identical, models are installed at each of the three major credit bureaus: Equifax, Trans Union, and Experian. The Fair, Isaac credit bureau risk scores, often called FICO scores, are known as BEACON score at Equifax, EMPIRICA score at Trans Union, and the Experian/Fair, Isaac Model. Each model assigns a numeric score to the particular underlying data available at the bureau at the moment on the given individual whose score is requested.

Fair, Isaac does not calculate or deliver the FICO scores. They are calculated at the credit bureau(s) where a FICO score was requested, and are provided by that credit bureau. Fair, Isaac does not have direct access to consumer credit information at these bureaus and, therefore, does not have the ability to make any changes to the underlying data in any given consumer's file, or to change a consumer's credit scores. The consumer must report the alleged inaccuracy or incompleteness to each pertinent credit bureau/consumer reporting agency. Once the underlying data that fuels the score is changed, the score will usually change as well.

The scores are not identical across bureaus. Due to differences in the underlying data, at a given point in time a consumer may get a slightly different credit score at each bureau. The scores are also dynamic; that is, they will change over time as the underlying information is updated and/or ages.

Each scoring model also calculates for that FICO score those factors where the consumer's particular facts, available at the time at that bureau, caused the consumer's score to be less than optimal. These factors are provided with the score as the reasons underlying the score, and are listed in descending order of importance. Such credit bureau score factors are often cited by lenders when complying with their legal obligation to provide the reasons for declining a loan application.

2. Specific issues you raised
In your filing in the Small Claims Division you allege that Fair, Isaac will not disclose which credit report data we use to calculate your scores, and that we failed to respond to your written inquiry "sent via planetfeedback.com." Prior to receipt of the Small Claims Action, Fair, Isaac's helpline for credit bureau scores had not received any written inquiries from you via planetfeedback.com. After we received from the Small Claims Division the Action you filed with them, our Mr. Barry Paperno of our helpline called you, and we also downloaded your letter to us from the planetfeedback.com web site.

a. Dates
In the letter you posted at planetfeedback.com you questioned why your collection item was listed as of 3/1997 at Experian, whereas you assert the is a 1995 paid $500 collection item." If you believe that the collection item is being reported inaccurately in any way, then you should investigate the matter with Experian and the specific lender and/or collection agency that reported the item. If, on the other hand, you would like us to help you understand how this item affected your score, then you would need to provide us with additional information, preferably the actual Experian credit profile that was scored. For example, you do not state whether the collection item reported as of 3/97 is a third party collection agency item, which would be reported on the date the collection agency first reported it, or whether it is the underlying credit obligation, which would be reported by the lender as opened at an earlier date and written off, or sent to the collection agency, at a later date.

In the phone discussion with Mr. Paperno, you asked which dates are captured by the Fair, Isaac models with respect to delinquencies and other derogatory items. Dates have a different naming convention at each of the three credit bureaus where FICO scores are available, and the date used by a model depends on the particular type of information being scored. All dates used are available to the consumer, because they are displayed on the pertinent underlying consumer disclosure that a consumer may obtain from the bureau. For typical delinquencies, Fair, Isaac models look at the date the delinquency was reported by the lender. When an account is written off as a loss by the lender, such as when it is charged off or sent to collection, the models use the date the account is written off as a loss. When viewing a collection item, the models look at the date the collection account was opened.

b. Types of accounts or companies that furnish information
When Mr. Paperno contacted you, you raised a new question--asking how the models capture the type of company for a given account or inquiry. For each trade line and inquiry listed, the credit bureaus have the information on the type of lender (e.g., whether it is a finance company, bankcard lender, auto or mortgage lender, etc.) embedded in the subscriber codes that are assigned to each account on the consumer's credit profile. Designating the type of trade line or company is a credit bureau function. If you are not sure which of your accounts or inquiries is designated to a finance company or auto lender, you will need to contact the credit bureau(s). Fair, Isaac does not control what information is displayed on the credit profile that fuels the score.

3. Conclusion
We hope this letter answers your concerns. You may contact our helpline or Mr. Paperno again, at (800) 777-2066, if you have further questions.



Sincerely

Thomas J. Quinn
Director, Client Support

Encl: Baker letter posted at planetfeedback.com

cc: Barry Paperno, Fair, Isaac