Have Credit Bureaus Finally Compromised?

Posted on 21. Mar, 2006 by in News

vantagescore.jpgThe WSJ is reporting that the three major credit-reporting bureaus in the U.S. have created a single new consumer-credit score incorporating data from all three bureaus.

The new credit-scoring system, called VantageScore initially will be marketed primarily to lenders, but officials of the three credit bureaus said that it will be made available in coming months directly to consumers interested in checking their credit scores through each of the bureaus–Equifax, Experian and TransUnion.

Credit-bureau officials said the VantageScore would “simplify” and enhance the credit process for consumers and credit grantors. But consumer advocates and others said the new system, which brings to at least five the number of credit scores that consumers can buy directly, would as likely confuse consumers as simplify the credit process, at least in the short term. They also said the new scoring system doesn’t eliminate the credit-rating system’s main problem: the reliability of consumer data on file with the credit bureaus.

The new VantageScore system developed by the three bureaus competes with the FICO score system developed by market leader Fair Isaac Corp. of Minneapolis, whose proprietary credit-scoring system is used by 80% of the 50 largest banks in the U.S.

My take on the new number is this: why create a “new” credit score number when you can keep lenders and consumers happy by just fixing the existing scoring system?? We’re getting used to FICO now, and so many people are using it that it makes sense to simply improve the accuracy of the data and make it more user-friendly. I suppose it’s the same way I feel about Microsoft’s new OS Vista – why don’t you invest money in fixing the problems that already exist. XP is a fairly decent system and could be a great system if you could only make it more dependable and user-friendly. Creating a new system isn’t going to fix the problems – it’s only going to start the cycle over again. The point is… just fix the current system before investing in a new one.

One Response to “Have Credit Bureaus Finally Compromised?”

  1. JoeS

    21. Mar, 2006

    Check out this commentary about the VantageScore from a former FICO insider – http://www.creditbloggers.com/2006/03/vantagescorebeh.html

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