@Anonymous wrote:
@Anonymous wrote:Hi Berk! Thanks for the heads up. A few quick thoughts right away, but I will try to write more late tonight. You write:
Looks like the three major CRB's are switching to Vantage Score in the fall.
Just to clarify, the three credit bureaus (aka CRAs) are not switching to VantageScore. VantageScore is a model that was created many years ago as a combined effort of the three credit bureaus, in an effort to compete with and provide an alternative to the arguable monopoly that FICO had on credit scoring.. As new models are released (VS 2, VS 3, and now VS 4) this consortium of the Big Three is always behind those models.
FICO will remain the dominant company in the credit scoring world for at least the next few years (except in the area of landlords pulling credit scores on prospective tenants -- Vantage has a definite edge over FICO there). Quite possibly five, seven or even ten years from now, FICO will still be the overwhelming choice for lenders and CC issuers (though who knows?).
Furthermore, even when lenders like a particular family of models (e.g. FICO or Vantage) they tend to be very cautious about migrating to that company's latest model. It's been 2.5 years since FICO 9 was released, for example, and we still have few lenders or CC companies using it for their decisions. So even if a lender was a big user of Vantage, they won't migrate to V4 any time soon.
All that said, I remain immensely interested in this issue of trended data and how creditors and scoring systems will be using them. So thanks for the heads up! Here are a few more links:
https://your.vantagescore.com/vs40-intro
https://studentloanhero.com/featured/vantagescore-4-0-new-credit-scoring-model/
PS. I haven't read them yet.
@Anonymous
Great info. Something a lot of posters here should read. Question for you regarding the highlighted area. Why is that? Purely because the Vantage scores are cheaper or is there another reason?
Price is the typical reason quoted for using VS: an internal Chase employee stated that baldly (on a different forum) when they were trialing Vantage - FICO $$$, Vantage $$, Internal $ (development costs not withstanding).
That said in this case I suspect it's a simpler rational choice: if you look into most of the rental check applications, they're backed by the bureaus themselves; why pay FICO money when you can peddle your own score?
I suspect that's actually how it works with the majority of credit monitoring and other products though I never really put that together until just now: if you see a bureau behind it, it's probably Vantage; Experian really is the only one of the three to step away from that with their FICO 8 and additional scores they're now offering in their own CMS, and that only happened like 5ish months ago which is recent.
I'd also suggest renters have a higher population of underbanked consumers than home owners, so if I were a landlord, I'd go with the score that most accurately predicted folks with limited credit information... and that's probably VS 3 out of the current market, I know FICO was trying to play catchup, not sure where that competition is between it and FICO 9 but since I can't get a FICO 9 today, off we go with Vantage.
Oh and this one quote which I personally love really tells you all that's needed to know about the relationship these days:
"VantageScore 4.0 offers predictive performance lift across all credit industries. In particular, the incorporation of trended credit data across an expanded applicant pool, and the 5.4 percent lift in predictiveness associated with mortgage origination, positions VantageScore 4.0 as an ideal tool for the mortgage market, in which only outdated FICO models are currently accepted as the result of an effectively government-sanctioned monopoly."
@Revelate wrote:Oh and this one quote which I personally love really tells you all that's needed to know about the relationship these days:
"VantageScore 4.0 offers predictive performance lift across all credit industries. In particular, the incorporation of trended credit data across an expanded applicant pool, and the 5.4 percent lift in predictiveness associated with mortgage origination, positions VantageScore 4.0 as an ideal tool for the mortgage market, in which only outdated FICO models are currently accepted as the result of an effectively government-sanctioned monopoly."
Zing!