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Feature passed the Fair Credit Reporting Act (FCRA), which put consumer-friendly regulations in place. The act spelled out the type of information the bureaus could and could not report and for how long; set standards for accuracy; protected consumer privacy; gave consumers the right to view, dispute, and correct their credit files; and required the bureaus to provide reports to consumers who requested them. The CRAs began to include positive financial information along with the negative in their reports as a result of this new legislation. One Score Rules Them All B y the late 1970s, most large lenders were using some sort of custom-designed credit scoring model in the loan approval process. "Credit scores created a common language across an organization that aided decisionmaking," said Chet Wiermanski, managing director at Aether Analytics. "But because these scoring models were personalized to meet each business' unique needs and customers, they were expensive to develop and time-consuming to implement." The big three credit bureaus—Equifax, Experian, and TransUnion—maintained the largest databases of lending and consumer credit information available; however, some businesses didn't report their information and many businesses did not report information to all three bureaus. Lack of consistent information across all three credit bureaus often left lenders struggling to evaluate the borrower's creditworthiness based exclusively upon credit report information. In 1989, Fair Isaac introduced a computerized credit scoring system that utilized the information in the databases of all three major credit bureaus. This score—called the FICO score—was designed to reliably predict whether a borrower would become more than 28 | The M Report management abilities to produce a credit scoring model that used the same algorithm at each credit bureau. Credit scores can influence much more The Recession than just home or auto Changes the Process loans; they're being I used for decisions about employment, insurance rates, apartment rentals, utility accounts, and more. 90 days late on the payment of a loan and quickly became the dominant credit scoring system offered at each of the three national credit bureaus. Six years later, Fannie Mae and Freddie Mac issued a letter strongly encouraging lenders to consider the use of credit scores in their underwriting guidelines. Consumers Gain Access B efore long, credit scores were being used in the decisionmaking process by more than just lenders and creditors. Utility companies, landlords, employers, insurers, and more were using credit scores to make both financial and non-financial decisions. Consumers soon discovered their lives were being affected by a three-digit score that they were not allowed to see. This issue exploded into the consumer consciousness in 2000 when E-Loan Inc. began to allow people to look at their credit scores online. Fair Isaac initially fought this access, but eventually it relented and collaborated with Equifax to provide customers with credit scores and reports for a fee. In 2003, Congress updated FCRA to guarantee consumers the right to see their credit scores. It also passed the Fair and Accurate Credit Transactions Act (FACTA), which enabled consumers to get a free copy of their credit report annually from each of the three bureaus. A New Model T he three major credit bureaus joined forces in 2006 to launch VantageScore, a generic credit scoring model that was based on an analysis of 21 million credit files over a two-year span. Their goal was to provide what they felt was more consistent and accurate credit scores by utilizing a patented interpretation of consumer credit files equally across the three credit bureaus. VantageScore was the first time the three companies had combined their analytic and data n the wake of the housing crisis and Great Recession, both the FICO score and VantageScore were evaluated by their respective developers to understand how well their scores held up during these difficult economic times. "One of the goals of these evaluations was to help lenders identify consumers who may be at risk of engaging in a strategic default and understand how credit scores performed on this subpopulation," Wiermanski said. "In other words, did these credit scores perform well at rank-ordering credit risk among borrowers who stop making mortgage payments even though they have the financial ability to pay?" Strategic defaults are most commonly associated with homeowners who owe more than their home is worth. "During the housing crisis, lenders found that many of these types of defaults came from borrowers whose previous credit scores had been excellent," Wiermanski added. The fifth-generation FICO score, the FICO 8 Mortgage Score, debuted in 2009. Developed specifically for mortgage lenders and servicers, it was designed to be up to 15 percent more accurate in predicting whether homeowners would continue paying their mortgages. The new score included greater leniency toward the rare missed payment, but greater penalty if payments were missed more often. Homeowners with payments later than 90-plus days were penalized with lower scores. The FICO 8 score ignored small debts in collections and public record items with an original balance below $100. It