Credit Scoring: FICO Scores

David A. Szwak

Credit Scoring: FICO Scores

Postby David A. Szwak » Wed Jan 18, 2006 7:48 pm

Freedom Card, Inc. v. JPMorgan Chase & Co.
--- F.3d ----, 2005 WL 3489468
C.A.3 (Del.),2005.
Dec 22, 2005

The CHASE FREEDOM card was officially announced in a January 27, 2003, advertisement in the Wall Street Journal, more than a year after the FREEDOM CARD card stopped being issued. "The CHASE FREEDOM card [was] a reissue of the CHASE Shell MasterCard." Chase, 333 F.Supp.2d at 242. The CHASE FREEDOM portfolio consisted of approximately 1.5 million converted Shell accounts and fewer than 10,000 accounts acquired after the January 27, 2003 launch.

Chase maintains that the converted account holders were generally between the ages of 46 and 55, had a FICO [FN6] score of 800 or higher, owned their own homes, and were married with average annual incomes between $40,000 and $50,000. Of the acquired account holders, 80% owned their own home and 60% had a FICO score of 780 or higher. Chase claims that the majority of CHASE FREEDOM cardholders had credit lines of $5,000--$10,000, with no annual fee and an annual percentage rate of between 12.4% and 14.4%. Id.

FN6. FICO refers to the Fair Isaac Corporation, which is the industry standard credit scoring system. FICO scores are based on a consumer's credit history. "The higher the FICO score, the more likely a consumer is to fulfill his credit obligations." Chase, 333 F.Supp.2d at 242 n. 6,

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