VantageScore May Be Getting Upper Hand on Fico

February 3, 2011 No Comments »
VantageScore May Be Getting Upper Hand on Fico

The lesser known VantageScore credit score made another inroad in its ongoing battle with the almighty FICO score, grabbing a patent for its proprietary system of “characteristic leveling.”

In short, characteristic leveling provides consistency among the 3 major credit bureaus, something the traditional FICO score has struggled with (why credit scores are different?)

So if the same data is presented by different credit bureaus, it should yield the same result, or credit score.

“The ability to use a common score across the three CRCs minimizes consumer and lender confusion,” said VantageScore Solutions President and Chief Executive Officer Barrett Burns, in a press release.

“Because of VantageScore’s consistency across all three CRCs, lenders who use it will be better able to delineate risk in a predictive manner.”

This is pretty important because many banks and mortgage lenders currently rely on the middle of our 3 credit scores when making a decision to extend credit.

And borrowers have to worry about disparities between their credit scores, which are often the result of different reporting by bureaus using the same or similar data.

In fact, many consumers have such a wide range of scores that they may be deemed excellent by one, and only average by another. Clearly that doesn’t make a lot of sense.

The hope is with characteristic leveling in place, differences in credit score will only be attributable to different data sets, as opposed to differing scoring algorithms.

This increased consistency could lure more creditors over to VantageScore, which is currently a very small fish compared to the all-powerful FICO score.

Recently, FICO also lost the trademark on its 300-850 credit score range, another meaningful victory for VantageScore.

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