"We've found there's a wide knowledge gap when it comes to credit, and people want to know more, they want to understand the rules of the game," says Fair, Isaac Vice President Sue Simon. "We also know from talking to lenders that they want to be having these kinds of conversations with their customers."

Myths and misinformation

Fair, Isaac conducted a series of 15 focus groups, designed to explore a broad range of credit, credit scoring and myFICO service topics. In a separate study, we surveyed consumers who have already purchased the myFICO service, the online service where consumers can access their FICO score and learn how to improve it by managing their credit more responsibly. (To learn more about how this research was carried out, click here.)

The consumers Fair, Isaac spoke with showed a moderate awareness of credit reports but had little knowledge of credit scoring. They had a vague notion that there is something called a "credit rating," but the details of credit scoring were a revelation to them.

They believed that they can improve their credit rating, but they either had no knowledge of how to do it, or their information was incorrect and could be harmful if acted upon.

Some of the potentially damaging myths included the belief that:

• Only unsecured loans are considered debt, not loans with collateral.
• A cardholder doesn't need to worry about fraud because the issuer will call if there is a problem.
• Not revolving a credit card balance will hurt a credit score.
• Accepting store card offers to get merchandise discounts won't affect a score.
• The three major US credit reporting agencies have exactly the same information.
• Checking your credit score will lower it.

"These consumers did not have the information they needed to make smart decisions about their credit health, and they wanted to be empowered with that kind of knowledge," says Simon.

Obtaining credit information was something the consumers Fair, Isaac spoke with generally did not like to do face-to-face, preferring the security and privacy of home. They did, however, have a positive reaction when they were shown the Score Power™ service available at www.myfico.com and www.equifax.com. They saw it as a potentially valuable source of education, and they appreciated the straightforward graphical presentations that allowed them to see where they stood compared to other consumers.

Opportunities for lenders

"Our research showed that consumers want to know the rules when it comes to credit," says Simon. "To help consumers feel more empowered, a number of lenders are partnering with Fair, Isaac and Equifax to offer myFICO services such as Score Power, Credit Advantage and FICO® Score Simulator on their Web sites.

"By providing their customers with the information they want," continues Simon, "these lenders are not only building stronger relationships, they're also reaching a profitable market segment, as indicated by our survey results."

The survey of Score Power users identified three types of consumers as primary targets for the service. The "Shoppers" group includes the 60% of users who are planning to apply for a loan in the near future.

The Fair, Isaac survey of Score Power users showed that the main reason they wanted the service was because they were planning a major purchase, such as a house or car. More than 60% of users were planning to apply for a loan in the near future. By offering Score Power via their Web sites, lenders have an opportunity to make targeted offers to this market segment.

"By providing access to consumer-friendly credit information," says Simon, "you will not only be helping to make your customers feel more empowered, you'll be creating a powerful marketing opportunity."

For more information about becoming a Score Power link partner, email myfico.affiliates@fairisaac.com, visit www.myfico.com or contact your Fair, Isaac representative.