The Hill News

The recent downgrading of government bonds in the US and several European countries has focused attention on three major rating agencies: Standard & Poor’s, Moody’s and Fitch. While the EU and others have faulted those companies for their lack of transparency and potential conflicts of interest, the three major bureaus that rate individual credit (Equifax, TransUnion and Experian) have largely escaped scrutiny.

That may soon change as the new Consumer Financial Protection Bureau (CFPB), established under the 2010 Dodd-Frank legislation, assumes its oversight role.

In it's report of last July (“The Impact of Differences Between Consumer and Creditor-Purchased Credit Scores”), the CFPB criticized scoring systems that provided scores to lenders that were different from the ones disclosed to consumers. Good, but not good enough. Deficiencies in the credit rating process go much deeper. They raise important questions of transparency and extend ! to the Fair Isaac Corporation (FICO) rules and their implementation.

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