If you can't beat 'em...

In an effort to maintain the integrity of its FICO scores, Fair Issac Corp. last month announced that as of September, your status as the authorized user on a credit card account will no longer be considered a factor that can boost your score.

Some credit repair firms have been able to jack up their clients' FICO scores by adding them as authorized users to a stranger's credit card. The credit repair firms pay people with good credit for the right to do this, with the understanding that the person being added to the card won't actually use it. It goes without saying that the creditworthiness of the person added to the card doesn't actually change, either -- but their FICO score might show an improvement.

Critics say these and other score boosting strategies have made FICO scores a less reliable predictor of mortgage loan default. Fitch Ratings recently determined that back in 2003, there was a 30 point gap in FICO scores between borrowers who defaulted in their first year and those that remained current. The gap fell to just 10 points in 2006.

Fair Isaac's decision to remove the potential benefits of being named an authorized user on another person's credit card account was just one aspect of an overhaul of procedures for calculating its "Classic FICO" score. The overhaul has the stated goal of improving the score's predictive power by 5 percent to 15 percent.

Because if the score becomes meaningless, why would lenders use it? But Fair Isaac is not averse to dabbling in the credit repair business itself -- or at least advising consumers on how to employ some of the industry's techniques.

For $49.95, consumers can now download the "Suze Orman FICO Kit Platinum" from Fair Isaac's myFico.com. The kit includes a "FICO Score Simulator" that shows how your score is affected when you apply for a new credit card and transfer balances, get instant credit at a department store, get a new auto loan or credit card, or pay your debt balances right away every month.

The kit even highlights "potential errors on your credit reports and give(s) you the tools you need to update inaccurate information" kept by the three major credit reporting agencies Experian, TransUnion and Equifax. All pretty much standard (and legit) strategies employed by the credit repair industry since the 1970s.

Of course, the press release for the new downloadable version of the Suze Orman kit emphasizes its utility in helping consumers generate savings, rather than its potential for generating revenue for Fair Issac.

"This kit shows you how important the FICO credit score is for bringing wealth into your home," Orman is quoted as saying. "The higher the score, the lower your interest rates and the more cash you have to buy a house or car, or pay down debts. When you buy the new platinum kit, you learn how to negotiate interest rates based on your FICO score, set up automatic bill payment reminders and potentially save thousands of dollars on home and car loans."

To its credit, Fair Isaac offers a good deal of free information on how FICO scores work via myFICO.com. But does it strike anyone as a little unseemly that Fair Isaac is trying to make money at both ends of the equation -- not only from lenders trying to gauge the creditworthiness of borrowers, but from borrowers trying to make themselves look better to lenders? Just asking.

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