Is FICO Your Ad-Vantage?

A friend and I were having dinner the other night and overheard a man ask a woman who was applying for a home loan about her FICO score.  She indicated her score was high but wished there was another system much different than the big three, because in her words, "There are items on there that are just not right.  Should I be judged by one small period of my life when the last 20 years I've never missed a payment on anything?"

Well little did she know there has been another scoring system that is 5 years old in the industry backed by some big players.  The problem is with this other system, is that FICO had sued them since 2006.  It's only since August of last year that the Eighth Circuit US court of appeals rejected a FICO appeal.  You see

this other system is backed by FICO's competitors Equifax, Experian, and TransUnion.

 

So what makes this new old system different?  Well to start its called the VantageScore system.  Vantage uses a scoring range from 501-990 versus the FICO 300-850.  Hearing that consumers found these scores confusing in general, Vantage decided to also provide a grade rating system of A to F.

The other difference maker of VantageScore is what they describe as "leveraging the core platform to deliver improved predictive performance that allows lenders to look beyond the economic volatility of recent years and reenter the market with confidence."

Certainly this is a delight to consumers who have been through the worst economic depression since the 1930's.  It also provides the lenders an alternative way of evaluating which borrowers are more credit worthy as we work our way out of this economic period.  

Since this decision, a number of lenders are using the VantageScore system.  Some like Chase, the banking giant, are now using the VantageScore system.  However, it is not publicly known what divisions are using it.

Other enders say they have been using the VantageScore system for automobile and credit card lending and that over the last 4 months have been testing it out int he home mortgage market.  

A recent report by VantageScore CEO Barrett Burns, states, "The results of this latest validation are a proverbial win-win.  Lenders are empowered to make better, more accurate decisions, and consumers are afforded  truer measurement of their credit behavior."

VantageScore also states that their system is "30-40 percent more constant  then other credit scoring models, developed by the 3 national credit reporting companies."

Perhaps, 12 months from now we might hear another discussion in that same restaurant, with this question, "So what's your Vantage?"