Consumer Finance

VantageScore Takes Issue With WSJ Story On Credit Scoring Sector

VantageScore Solutions, the developer of the VantageScore credit scoring model, said Monday (Feb. 6) a recent Wall Street Journal story on the credit scoring industry “contained a number of faulty statements.”

In a press release, the company argued that credit scores are used by lenders and other market players in a host of different ways, including for marketing and originating loans, to manage their portfolios, for tenant screening by landlords and for evaluation by utility companies to help determine customer deposits. “There is not ‘one true credit score’ that is used for all credit decisions or ‘one true method’ to construct a predictive credit score,” VantageScore said in the release. “There are dozens, if not hundreds, of credit scoring models currently in use in the marketplace, and they can be designed to predict different things. These include generic risk models such as the three VantageScore models and some 56 different FICO models. There are also credit scoring models designed specifically for certain loan products, such as auto or mortgage loans, and custom models used by large lenders.”

VantageScore went on to say that, given the number of scores being used, it’s “highly unlikely” for a consumer to have the same exact credit score with any amount of “certainty or regularity.” VantageScore noted that, in 2006, the three national credit reporting companies introduced VantageScore because lenders and other players wanted choices.

“As The Wall Street Journal article notes, FICO did file a lawsuit against VantageScore Solutions LLC and the three national CRCs after the introduction of the VantageScore credit score, however, FICO lost on all of its claims. The Wall Street Journal article failed to disclose this fact,” VantageScore said. “Notwithstanding the litigation, competition among credit scoring model developers has flourished and has fostered a number of important consumer-friendly innovations, such as making credit scoring more inclusive, ignoring paid collection accounts and leveraging alternative data, to name a few.”

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