Fair, Isaac and Co. (FICO), which once bitterly fought to protect credit scores from public gaming is now offering to sell you your score with information on how to improve it.

It is a good idea to know your credit score and keep tabs on your credit report, at least once a year, especially if you are financially active.

There are, however, numerous ways and places to obtain your credit information but the information isn't always the final word on your mortgage application.

The $12.95 deal from FICO's Web site myFICO.com, buys consumers their credit score, a credit report from Equifax, one of three credit reporting agencies, and what residential mortgage and auto loan interest rates you are likely to get with that score, based on rate data from Informa Research Services, Inc..

"In one visit to www.myfico.com, consumers can purchase their current FICO score, get Fair, Isaac's detailed explanation of their score and the underlying Equifax credit report, and see what loan rates correlate to their score. Fair, Isaac's FICO score explanation report includes personalized suggestions for improving the score over time, based on the individual's credit history," FICO says in a release issued last week.

Based on your past credit history and other factors, credit scoring is a statistical evaluation of your creditworthiness -- how likely you are to default on a loan. The higher your score, which ranges from about 300 to 900, the lower the probability you'll default.

The scores credit issuers use are primarily "FICO" scores, named for Fair, Isaac, which has a stronghold on the market. Lenders rely heavily upon FICO scores for mortgage application decisions, but they don't rely solely upon the scores.

"We look at everything, but there are programs that might require a base score or it will not offer that loan to any client," said Alan Russell, a mortgage broker with Online Capital Mortgage in Los Gatos, CA.

Two years ago, in the heat of public outcry over credit scores once guarded as securely as a state secret, FICO said the scores could do more harm than good if they are released without the context of an actual loan application.

FICO warned that consumers who obtained their scores and found that they were too low to qualify for a loan would attempt to game the system by attempting temporary changes in credit behavior to raise their score. That, FICO said, could do more harm than good.

Since then, however some states passed laws that allow credit users in certain instances to obtain their credit scores for free and the three major credit bureaus, Equifax, as well as Transunion and Experian, all sell the scores along with credit reports for the same $12.95.

For better or worse, because not all of them fully explain credit scores, a host of Web sites also offer package deals on credit scores and reports from all three credit reporting agencies.

Anyone who subscribes to a credit reporting agency, a mortgage broker, a real estate agent, a friend or relative in some financial business that needs legitimate access to credit reports, can get your credit report provided you request it in writting with your signature. Such a request is typically made along with a loan application.

FICO is careful, however, to point out that while the credit score can be a significant determining factor in a mortgage decision, other factors also play a role.

"We've cut through the credit confusion to show consumers what interest rates they should qualify for today based on their current FICO scores, while recognizing that lenders may also take into account their income, down payment and other factors," said Sue Simon, vice president of myFICO.com.

Some experts, nevertheless, take issue with FICO's approach to hawking credit scores.

"This appears to be another one of those things that makes consumers do less than they should when applying for a mortgage," said Russell.

FICO gives as an example a score of 600 (as of the March 6 date of the release) would qualify for an average 30-year, fixed-rate mortgage rate of 10.1 percent. FICO says it's online calculator reveals that if a consumer improves their score by 75 points before applying, he or she could potentially save more than $70,000 over the life of a $100,000 mortgage by lowering their average interest rate offer by nearly 3.0 percent.

"Credit scores do affect interest rates, but the example used, a score of 600 equals 10 percent, is very deceptive," says Michael Ryan, broker and CEO of San Jose, CA-based Flat Fee Funding, Inc.

"I have first-time home purchasers with a 615 credit score who qualify for a 30-year fixed rate that is only 0.75 percent above the rates I can get for the same purchaser with a 750 score," Ryan said.

Because consumers can't change credit scores over night, there's also concern that FICO's advice to improve credit scores before applying for a mortgage could be misunderstood.

"Many consumers can realize significant savings on interest rate payments by improving their FICO credit score before they approach lenders," the FICO release says.

Right now, with the economy improving and home sales moving, interest rates could rise as well as home prices.

"Do they wait for this average to get better while home prices increase 10 percent and interest rates go up 0.5 percent? I often advocate to many to make an effort to purchase now because the market will go up from today's point," Ryan said.

"On the other end of the scale, I am constantly asked by clients with credit scores above 770, 'What can we do to get a perfect score?' At these credit scores, a higher score will not improve anything. I am seeing an undo amount of time spent trying to improve upon something that won't generate anything beneficial," Ryan said.

Published: March 14, 2002

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A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the Deadline Newsroom.