Raines said he wants Fannie Mae to be in the forefront to end the secrecy around credit-scoring models. Therefore, he said all the factors used in Fannie Mae's credit-scoring model will be disclosed. I hope Fannie Mae will be the catalyst that will force all lenders to move out of the dark ages in which credit scores and what goes into them are kept secret from consumers. One of the most widely used credit-scoring systems, referred to as FICO, was developed by Fair, Isaac, a San Rafael, Calif., company. Currently, Fannie Mae uses FICO scores as one of the 14 factors in its own automated underwriting system, which is an electronic way to predict the risk of default.
Credit scoring applies a mathematical formula to a consumer's credit history.
The individual can't find out how or why the judgment is made. It's amazing to me that lenders demand the right to collect every detail about our lives in order to market to us. Yet when we ask for information back, such as our credit scores or the factors determining them, they tell us to get lost. I'll tell you why. If lenders are grading us, we have every darn right to know on what basis.