I believe that too much importance is placed on credit scores now. Especially when you consider that it's a fairly new phenomena. The Fair, Isaac Corporation has been around since 1956, but it wasn't until 1995 that Freddie Mac and Fannie Mae encouraged lenders to use the FICO formula to determine whether a mortgage loan should be approved. This shot the FICO into the limelight and guaranteed their success as a company. The scores and the process were heavily guarded secrets, and it wasn't until 2000 that people were able to get their own scores. Prior to that, a person denied a loan was told only that his credit score was too low, with no other explanation. We can thank the internet for getting a law passed by Congress that made accessibility to scores mandatory. When the secret formula was divulged via the internet, the public demanded to know their score, how it worked, and what could be done to improve it.

The Fair, Isaac Corp saw the problems that arose from the passing of the Fair Credit Reporting Act (FCRA) which was passed in 1970 and enacted in 1971 that was passed due to the high number of discriminatory practices that were being used by lenders. There wasn't a uniform way of determining credit worthiness, and FICO took advantage of the disparities and devised their formula. During the 1980's, the formula was seen as unbiased and impartial based only on the person's previous credit history. The government, in desperate need of a some type of guideline, fully endorsed FICO. And has used it since. Other credit reporting agencies like Experian tweak the formula in a few ways to arrive at their scores, but basically, every score is initially the FICO score.

Freddie Mac and Fannie Mae, the two mortgage companies encouraged the use of the FICO by banks in determining mortgage applications, and in fact, required the score be included in the 1990's. But, as every American should know, the government had to bail out these companies due to their questionable transactions, and $148 billion dollars has already been given to the companies in the form of tax dollars, and another $40 billion may still be needed to avert their collapse.

I understand that the FICO scores had nothing to do with the mortgage purchases made by Fannie Mae and its consequential downfall, but I do think that the importance of the FICO scores is highly exaggerated. These once overly secretive scores seem to be available to anyone and are being used to determine job placement, as well as other non-loan applications. Unless the job requires money handling, a person's credit score should not be come into play. It becomes a Catch-22 for many people. A person is trying to get a job to pay off his debts, but can't get a job because of his debts.