Credit Scoring Excoriated

This week the FTC held a public forum on the issue of credit scoring, a practice I criticized in a previous article. Since that article was written, several interesting developments have occured to heighten public interest in (and concern about) credit scoring practices.

Most notable perhaps is the creation of the Anti Credit Scoring Ring, the brainchild of Barbara Woodcox of the Consumer Aid Education Center. This webring has served as a rallying point for internet consumer advocates whose websites oppose credit scoring -- or at least the secretive, arbitrary, and often damaging way in which credit scoring is currently used.

The new Anti Credit Scoring Ring has also created for the press a central point of contact for reporters needing a "source" on credit scoring, credit file errors, credit bureau practices, consumer credit rights, and so on. With increased media attention, pressure will build to reform the "wild wild west" practices of the credit scoring industry. This week's FTC hearing is evidence of that -- and may well signal the government's willingness to take action to protect consumer interests if the industry will not police itself.

To coincide with this week's hearings, Bankrate ran a week-long series focusing on credit scoring, how it works, why lenders favor it, and why so many people think current credit scoring practices are grossly unfair and damaging. Check out this article in particular, in which I get to add my two cents worth: Consumers' Credit Scores Still a Well Kept Secret. And if you'd like a second opinion from a mortgage and real esate professional who works with credit scores every day, visit Christine Baker's outstanding site, Bayhouse WWW.

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