MINNEAPOLIS — The Fair Isaac Corporation, the originator of the very widely used FICO scores for measuring credit histories, has announced that a change in the way it calculates the score will eliminate the ability of some with good credit scores to rent them out to people with lower credit scores.
Although experts dispute over whether the practice is illegal, the Fair Isaac Corporation says the latest change to its credit scoring system will at least cut down upon and perhaps eliminate the practice of renting credit scores.
Renting credit scores, or "credit-boosting" is where someone with perhaps a low FICO score in the 500′s will pay someone with a good credit score to add them to one of their existing credit cards as an "authorized user" without actually giving them the card or card number.
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As an "authorized user" of the credit card the new cardholder with the poor FICO score took on, under the old system, the good credit history of the good cardholder. This is the practice which Fair Isaac says its new system will end.
"We will do whatever it takes to protect the reliability and accuracy of FICO credit scores for lenders, and to ensure lenders can continue to use FICO scores with confidence when making their most important customer decisions," said Dr. Mark Greene, CEO of Fair Isaac. "We will continue working with lenders, regulators and others in the credit reporting industry to end deceptive practices that fraudulently misrepresent consumer credit histories for profit."
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