@Tazman81 wrote:
Not that I am trying to bash FICO in ANY way, but just looking at both sides of the coin here. What does this mean for the FICO scoring system? We had Experian stop giving them and now Equifax. Are the CRAs seeing something in the algorithm that they do not necessarily agree with and/or like? Will the FICO scores still be the ones that are pulled by those giving credit? I am just a little skeptical about where this is all heading.
No, this is business to business merchandising. The CRA's are gathering records at a cost to businesses to report onto all of our credit files and they are currently outsourcing to Fico for the use of the scoring algorithms that lenders came to know and trust for risk assessment. By introducing their own scoring methods which to date has not cracked even a small percentage of lenders no matter how much they sell them to consumers. The CRA's have the hopes of these methods catching on to lenders are atleast making a buck off them directly from the consumers. Most of which are maybe unaware of the fact that lenders do not use these scores for risk management. I do believe some models are pretty much resolved to being sold only directly to consumers like the experian plus model.
I do not know exactly how their deals with FICO are broken down maybe they lease the rights from fico i'm not sure. But if they can crack the Scoring algorithm market meaning if some lenders come to trust these scores that they have for extending credit then they can net profits by eliminating the expenses associated with employing FICO.
IMO and you can feel free to disagree with this I just don't like the idea of a reporting agency also supplying the scoring method that alot of lenders would use. That is two different business responsibilities that should remain seperate in my opinion and shouldn't be under one tent. That's just too much power. But others may not see a problem with this. I just think that those doing the scoring should not have direct business with those doing the lending (creditors). Reporting agencies side with creditors the vast majority of the time so how may this impact your score when well paying creditors have a grudge against you. Maybe it's a little bit of a conspiracy theory but I dunno.
Current Score: Eq: 823 Tu: 830