Credit Bureaus Ratchet Up Scoring Wars

Consumers for years have tangled with the three major U.S. credit bureaus because of inconsistent or sometimes inaccurate data. A fourth company actually introduced a credit scoring system using data from the information companies to attempt to predict the creditworthiness of a loan or other obligation.

Now the credit bureaus - Equifax, Experian and Trans Union - are fighting back. They have introduced a new scoring system that makes use of a different scale. The industry standard, known as a FICO score since it was created by Fair, Isaac Corporation, used an 850 point scale. The new program, called VantageScore, uses a 990 point scale.

"The truth is that there were always inconsistencies between the different bureaus' reports," said Consumer Help Web President Joan Bounacos. "We simply wish they had entered into an agreement with Fair, Isaac so that consumers were not confused by knowing whether a particular number was good or bad."

Consumers are entitled to receive a free credit report each year, and some industry experts have expressed concern that the VantageScore, which can be sold, is an attempt to generate more consumer revenue. "We know that they have to make the data available," Bounacos said. "But now they can simply say that that they have complied by supplying the raw data."

Fair, Isaac had previously released proportional information that told consumers how their actions could impact their credit score. VantageScore, which is a separate commercial entity owned jointly by the credit bureaus, has released more information, but consumer advocates say the data is harder for consumers to understand and may lead to differing conclusions.

"No one is going to share their secret formula, nor should they," Bounacos said. "But to help consumers improve their credit, VantageScore should release at least the proportion of different actions that go into computing the score. Nothing will be gained by hiding this information from consumers."

posted by Consumer Help Web Editorial Team at 6:22 PM |