Patent ID: 7280980

Claim:
A method for explaining credit scores, comprising the steps of providing a Web site that contains informative resources, said Web site comprising any of for-pay services and extranet/Internet functions; offering consumers access to information contained in said informative resources, the resources being, both general and personal, about practices comprising any of collection, storing, reporting, and evaluating consumer credit data; accepting consumer credit scores and reason codes from individual consumers or third parties, in interactive or batch modes; and providing an explanation report to said individual consumers based upon the individual consumers' credit scores, said method for explaining credit scores further comprising the steps of: defining a credit score as a function of prediction characteristics; defining a surrogate set of characteristics as representing areas for improvement; developing a surrogate score to approximate a real credit score, using said real credit score as a performance (dependent) variable and using said surrogate characteristics as predictors; and defining a potential improvement metric for each area for improvement; wherein said developing a surrogate score step further comprises the step of: using said areas for improvement prediction variables to develop a surrogate score of the form ψ(z 1 , z 2 , . . . , z p ), which is developed using z 1 , z 2 , . . . , z p as said prediction characteristics and Y=ζ ( X 1 , X 2 , . . . , X c ) as said performance variable; and wherein said defining a potential improvement metric step is defined as: I k = ⁢ 100 × max z k ⁢ { ψ ⁡ ( z 1 * ⁡ ( z k ) , … ⁢ , z k , … ⁢ , z p * ⁡ ( z k ) ) - ψ ⁡ ( z 1 * , … ⁢ , z k * , … ⁢ , z p * ) } Score * = ⁢ Maximum ⁢ ⁢ possible ⁢ ⁢ percent ⁢ ⁢ improvement ⁢ ⁢ in ⁢ ⁢ score ⁢ ⁢ for ⁢ ⁢ Area ⁢ ⁢ of ⁢ Improvement ⁢ ⁢ k , where z 1 * (z k )=z 1 * unless z 1 * cannot coexist with z k , wherein in that case, z 1 * (z k )=E[z 1 |z k ], or some other value of z 1 that can coexist with z k .