FICO’s domination of credit scoring under siege by Vantage Scores

Hey all-

This article talks about how your FICO score is the Kleenex of credit scoring and how a new upandcomer is set out to take away some of their market share.

This new player is a joint venture between the three major credit reporting agencies. It’s called a VantageScore.Â

“Its
ambition is to produce a credit score that is more predictive and
consistent than that available from FICO, and over time to whittle away
at FICO’s very large and very profitable share of the market. The
company will not only produce a better product, according to Mr. Burns,
but it will be cheaper to lenders.”

Now here’s the key point of why it’s being introduced:

“The fees charged to lenders will be lower, but the real selling point is the greater predictability of the score. That means fewer delinquencies and higher profit margins for lenders.”

It’s to make more money. It sounds like the three agencies are tired of giving money to the Fair Isaac Co and now they want their bigger piece of the credit scoring pie.

There’s no need for the new VantageScore in my opinion. It’s still going to be composed of differently compiled information from each agency so the scores will still be different from each one. This is what they say they are going to combat by having this new scoring system.Â

-Adam

technorati tags:FICO, credit, score, VantageScore, scoring, system