Settling the score

Chris Larsen, CEO of E-Loan, briefly made such scores available to consumers at his Web site last February.

But he had to shut down the service after credit bureaus, citing contractual agreements, cut off all consumer credit data to E-Loan, temporarily hampering his business.

Based on what happened next, you might say you can fight City Hall.

Larsen began a campaign to force credit bureaus to reveal the scores to affected individuals, not just banks. As a result, California Gov. Gray Davis signed a bill on Sept. 29 requiring credit bureaus and mortgage lenders in that state to reveal applicants' credit scores.

California's law doesn't take effect until July 1. But some credit bureaus are planning to exceed the requirements. They've decided to release the information to all consumers, everywhere, as soon as new systems are in place. That may be only days from now.

Why should you care? Because your score can mean a difference of 10 percentage points in the interest rate you pay on, say, your next car loan.

Based on testimony Larsen gave recently to the U.S. House Banking Committee--which is considering a federal requirement--here's how your rating might affect you:

• 720 or higher. This score gives you an "excellent" credit rating. You might be offered a 7 percent interest rate on a car loan.

• 680 to 719. This rating, which is still considered "good," would bump your interest rates a full two percentage points, to 9 percent.

• 660 to 679. This more questionable rating would cost you 10 percent to 11 percent interest on a loan.

• 500 to 659. Are you sitting down? This credit score could sock you with anywhere from a 14 percent to 21 percent interest rate--if you could get a loan from any lender at all.

Larsen charges that your credit score might not be a nice, clean rating of your credit history.

"We simply don't know whether credit scores actually judge your profitability as a customer rather than your credit worthiness," Larsen said in an interview.

For example, a customer who often pays interest fees or high-priced late charges, but always makes a payment eventually, might be more profitable to a lender than someone whose pays the full balance every month.

Although the credit scoring system is used by several credit bureaus, a single company named Fair, Isaac & Co. (FICO), based in San Rafael, Calif., determines the basic formula that's used to rate you.

In October, the company launched a Web site that provides lenders with an explanation of an individual's FICO score, said Craig Watts, manager of consumer affairs.

The FICOGuide site shows how a sample credit score is calculated. You can ask a lender to obtain this report for you for an $8 fee.

Meanwhile, of the three major U.S.-based credit bureaus, only Equifax and TransUnion are on the verge of giving you your credit score when you request your full credit record from them. Experian, the third bureau, hasn't yet determined how soon it will include your credit score along with your other data.

Ordering your credit record ordinarily costs up to $9. You can also get a free copy if you've been denied credit within the past 60 days, or if you live in certain jurisdictions. Check with each credit bureau for its policy.

When your credit score becomes available, which looks like it could be any day now, ordering your record may clear up some of the mystery surrounding those loans you never got.

And, of course, E-Loan plans to be at the front of the pack to offer you this information.

Consumer advocate Brian Livingston appears at CNET News.com every Friday. Do you know of a problem affecting consumers? Send info to tips@BrianLivingston.com. He'll send you a book of high-tech secrets free if you're the first to submit a tip he prints.