@Anonymous wrote:
@Anonymous wrote:
Why would lenders occasionally use Vantage? If they use FICO most of the time, it just seems silly to use a different one every once in a while. Is there any purpose in doing so?
There is a very good reason. Money. If they can prove that vantage scores are equally predicitive (or more so, or even slightly less so, but within a cost saving margin of error) and they pay less for the vantage score you could be talking about huge savings over the course of years. For the new scores to get proven levels of predictability, someone has to take a chance. Its potentially a situation where the CRAs offer a given lender a deal to use vantage scores to test the reliability. Some companies use an in house score that has little to do with either of those. No matter someones score, there is always risk with lending, and contrary to what would seem to make sense, low risk consumers are not necessarily preferred.
Obviously defaults are a cost, but someone that carries a large balance and pays crazy amounts of interest may well be more profitable even if they eventually stop paying and default. Where the guy with the 820 score that never pays interest only generates swipe fees. For profit, you need some mix of risk, different lenders approach their risk/reward matrix differently. Amex has highe swipe fees, so lower risk consumers are generally preferred. Cap1 secured cards have crazy interest rates AND a secured deposit.If someone carries a balance on one, you get a basically full payment guarantee plus interest profit and swipe fees.
Different markets require different demographics, not to mention the *possibility* that at some point vantage score may pass fico for predictability.
As a consumer I like having choices, as it drives prices down, and I will bet chase, citi, boa etc also like the options.
@Anonymous... to the extent VS is used it is more than reasonable to conclude that usage is NOT exclusive. Furthermore while I agree with the above comments to an extent... its also not that simple. I've already talked @ length on this subject - not going to beat a dead horse here. Suffice to say...
The problem when u begin delving n2 the derth of CRA's (which VantageScore falls n2) is the inherent structure of the various scores involved. VS (as an example) is now on its 3rd model and unfortuantely no more effective/predictive than when it was introduced. As such the general conclusion can be (and has been) made that just bcuz an independent/new/alternative etc. scoring model is being used does NOT mean it is effectively/accurately profiling your creditworthiness. I've discussed this point many times.
Does VS serve a purpose.... yes. It serves the same purpose nearly every other 3rd party site offering credit scores does... a gauge of your approximate scores. Its as simple as that. Should u be relying on VS? Obviously U could but (IMO) that would be wholly inadvisable. And while the above statement that "different markets require different demographics@" is true a reality exists nonetheless wherein alternate scoring formulas being used to asssess one's creditworthiness are skewed in a manner that does not judge one's credit either fairly or accurately so that its really in everyones best interest to build and maintain healthy credit profiles that wont hav us @ the whims of the numerous CRA's whose models may or may not serve our best interests.
**And for the purposes of this post I'm not even going to address the topic of unscrupulous lenders who intentionally engage in deception/fraud (part of which includes purposely manipulating scoring data) for their own benefit - thats an entirely different topic altogether yet goes hand in hand with questionable scoring methodology**
Perhaps another time.
