When the Competition inspectors, bearing a court order, entered the offices of several banks and banking associations last Tuesday, the surprise of the employees was maximum. “We watched them walk past us and thought: what else do they want this time?” – says one of the bank’s back office employees.

Some of the bank managers did not panic, they even foresaw that the wave from the West, which once again pushed banks to the wall and imposed excessive taxes, would one day reach Romania. By the way, about two weeks ago, a delegation of top bankers met with political officials and resolved the issue of taxation of excess profits of the banking system so that everyone would reconcile. Then some executives went on vacation, happy that at least one of the problems had been solved. But in the meantime, the Antimonopoly Authority decided to intervene.

This time the competition inspectors were looking for something different. Evidence to confirm that a citizen who wants to refinance a loan in banks other than the one in which he borrowed money is not recommended. And here’s how:

Let’s say that Ion Ionescu (a fictitious name, of course) borrowed 50,000 euros from bank A. After a while, he sees that other banks offer better terms and would like to transfer his loan to bank B, C, D or E. after that he makes a request to the other 4 banks to find out which offer suits him better.

The 4 banks (B, C, D and E in our example) follow the standard procedure: they query the ANAF database and then the Credit Bureau database. In short, the credit bureau has 4 background checks for Ion Ionescu.

Bankers with whom HotNews spoke told us that the Competition’s suspicions are based on repeated requests from the Credit Bureau for the same name (in our case, Ion Ionescu), the FICO score (which we will detail below), according to which Ion Ionescu is eligible for credit, decreases.

By lowering his FICO score, banks are offering Ionescu worse credit terms, so Mr. Ionescu will be forced to remain “affiliated” with the Bank A gang.

“We ask the computer software to run the program. If this software bought from FICO and not made by the bankers is giving us that result, then what is our fault?” the bankers say.

What is a FICO score and how is it calculated?

Before about 1950, there was little data on the applicant for a bank loan in the United States. America’s first “credit bureaus” consisted of a handful of people who read the newspapers every morning looking for information: notices of arrests, marriages, promotions, layoffs, and so on. They were also interested in people’s family problems, sex life and/or political activities. In short, nothing was based on science, only public affairs.

But around 1956, William Fair and Earl Isaac came up with the idea: What if we could predict the extent to which someone (Ion Ionescu) would honor his commitments?

Initially, “good” credit was correlated with the fact that the applicant owned property, lived at the same address for a long time, had a stable job (where he could be promoted), and was mature and serious enough to understand that any what loan needs to be repaid.

These two, William Fair and Earl Isaac, started a firm called Fair, Isaac and Company (FICO, I’m sure you got it) whose product had a 3-digit score (between 300 and 850, but if you wanted to qualify for to get a mortgage loan you had to have a score above 63), assigned to every applicant for a loan.

Credit officers compared this assessment with the client’s file and checked whether the assessment did not exceed the bank’s expected risk level.

After the appearance of FICO, other private credit bureaus appeared, but FICO was the first, and Romanians also bought the right to use it from them. Over time, FICO has become the standard for American lenders.

How FICO is calculated

The FICO score takes into account five types of financial information about an individual, weighting each of them differently. The exact formula is a secret – in other words, even Romanian bankers don’t know it, but it generally consists of payment history (35%), total amount of the request/loan (30%), the length of your credit history or relationship you have with the bank (15 %) and two points for the credit mix: you have other cards or you have an overdraft (10%) and if you have applied for new loans in the past (10%).

At the end of the day, it comes down to your FICO score, which decides whether or not the bank will grant you a loan.

HotNews sent questions to FICO’s offices in Spain and the UK on Monday to see if they had faced similar challenges from competition authorities, but at the time of writing we had not heard back.

We also tried to get a perspective from the credit bureaus, but were politely declined due to the ongoing investigation, which does not allow information to be released to third parties.

Bankers and representatives of the Competition Council discuss through communiqué. Antitrust officials say they suspect customers are being blocked from accessing “banking products and services,” while bankers say they have no alternative to checking whether a customer is a good or bad payer like through a credit bureau. Who, as I said, is not saying a word in this whole scandal.

Against this relatively murky background in terms of information, a variety of scenarios arise. Because some are trying to create an image and want to politically profit from the advantages of the function, because this FICO score has been working for many years and why only now some people realized that it is something illegal (repeat, the right to use it was bought from the Americans, FICO is not a Romanian product ), it’s really good that something like this is happening because they were stealing our banks and we had no idea.

When we get new data, we will come back to provide it to you