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A row has erupted over credit scoring after the head of Fico, the company whose metric underpins trillions of dollars in lending decisions in the US, hit out at some lenders for supplying customers with a rival measure he dismissed as “Fako”.

JPMorgan Chase and Capital One risked confusing consumers who wanted to know how lenders viewed their creditworthiness, said Fico’s chief executive Will Lansing.

“There’s a three-digit number that’s being shared by the bank with the consumer that is not the score the bank is using to make the lending decision,” he said. “We think there’s room for confusion.”

The group that supplies lenders with the rival assessment, VantageScore, hit back, saying Mr Lansing was spreading “misinformation aimed at discrediting Fico’s only real competitor”.

“Thousands of lenders use VantageScore credit scores in their businesses, including for credit decisions,” it added.

The spat points to the opacity of credit scoring, a crucial part of America’s consumer finance economy that is in the spotlight after the huge data loss at the credit reporting company Equifax. Capitol Hill has been scrutinising how the scores are determined and used as part of a wider probe into consumer credit.

Fico provides software which credit reporting companies such as Equifax, TransUnion and Experian use to generate the credit scores they provide to banks and credit card companies.

Fico’s score remains the most widely used, although the credit reporting companies developed their own competing model, VantageScore. Lenders often use several different measures in their decisions.

Adding to the complexity, each credit reporting company generates its own version of the Fico score, using the information it has collated about consumers.

The scores aim to predict how likely individuals are to repay their debts by considering factors such as payment record, amounts owed and length of credit history.

US lenders use them to determine the terms consumers get on credit cards, mortgages and other loans. The Fico algorithm assigns borrowers a three-digit rating between 300 and 850. In some cases, according to Fico, its score for a customer can differ from other formulas by more than 100 points.

Chase offers holders of its Slate cards a monthly Fico score but provides TransUnion’s VantageScore for “educational purposes” to other consumers — they do not need to be customers of the bank — through its Credit Journey service.

“We offer anyone who enrols in Credit Journey free credit scores,” the bank said.

Similarly, Capital One also provides the VantageScore readout to consumers through its CreditWise service. “The score is only one aspect of credit,” it said. “CreditWise users get access to much richer information.”

Mr Lansing said “virtually all the major banks” provide customers with Fico scores free of charge. “There’s a couple of exceptions,” he said, raising questions about transparency. “It looks like it, smells like it, feels like it — it’s being presented as some kind of an indication of your health, but if you look at the fine print, you’ll discover that it’s not a Fico score,” he said.

Consumer rights advocates warn customers can find themselves unexpectedly turned down for mortgages or other loans because they thought their score was better than it really was.

“We have always advocated that all consumers should have access to a free reliable score — reliable meaning the score the lender uses to make a decision,” said Pamela Banks, senior policy counsel at Consumers Union.

Liz Weston, author of Your Credit Score, said: “If all you want to do is generally monitor you credit and be alerted if there’s a problem then essentially any score will do.”

But she added: “If you’re getting a specific loan, a few points will make a difference.”

TransUnion said VantageScore was used by more than 2,400 lenders and “yields the most consistent results”.

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