Yesterday, I was surprised by an announcement from Experian, who announced that after February 14, 2009, it will no longer offer the FICO score based on its credit database. I consider this a move to force lenders and consumers to abandon the FICO credit score model developed by Fair Isaac and use instead the its own “PLUS” (aka the VantageScore) system. The FICO score is the score most used by lenders, and it offered for sale on Fair Issac’s website, myfico.com. Currently, consumers can go to myfico.com and purchase 3 FICO scores, based on data from each of the major credit bureaus.
Why would Experian try and influence lenders to use its model? The name of the game is revenue, and licensing of a scoring model to lenders means big bucks to the credit score model developer.
The next question is why should you, the consumer, care what scoring model is used when you order your credit score. The difference can be huge. If a mortgage lender says you need a 700 credit score to qualify for a loan, they generally mean a FICO score. As we stated before, most lenders are not using the VantageScore scoring model developed by the credit bureaus. If you can only get access to a Experian VantageScore or a “PLUS” score, you won’t know in advance if you qualify, which can lead to aggravation and unpleasant surprises. Some in the credit industry (including most of the readers on our discussion boards) call the credit bureaus VantageScore models FAKO scores (‘cuz they’re fake), instead of FICO scores.
You might be asking yourself how it’s possible to get a different score out of the same credit bureau data. How it works is this: the FICO Scoring system weights some of that data more heavily in favor of consumers than the Vantage Score, some less favorably. There is even a different points range between the two models. You can do a comparison here. Same data, but different scores result. Depending on the individual, the score differences can be big. You are really comparing apples and oranges.
With the coming change, a consumer will not be able to purchase their FICO score based on Experian data anywhere. One ray of light, consumers will still be able to see all the information on their Experian credit report, even if the FICO score based on that information will not be available. The FACT Act in 2003 forced the credit bureaus to give out one free annual credit report to consumers, but scores needed to be purchased. If you apply for a mortgage, your mortgage lender may be good enough to show you your FICO score.
Will TransUnion and Equifax follow suit? Since the VantageScore model was a joint effort by all 3, my guess is “yes”. If this happens, we are reverting partially to 1997, before which a consumer was not allowed to see his or her credit score or credit reports. (If you can’t see the score the lenders use, you don’t have access to your true score.) The changes to the FCRA in 1997 forced the Big 3 to allow consumers to purchase credit reports and scores.
I guess they just didn’t say which kind of score the bureaus had to sell you.
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Only time will tell if this latest evil wrinkle is any more evil or wrinkled than Equifax’s current FICO model. Wide market acceptance will eventually follow…lenders will have no choice but to adapt. Who knows? The current FICO system is such a disastrous mess (serving, as it does, for the benefit and enrichment of lenders only) that it’s a 50-50 shot as to whether or not the new Vantage score will be any worse than the current FICO or (various) FAKO models. Just accept the fact that the system has served, and will continue to serve its master, the banks.
I don’t actually care which system is used.
I just want advance notice of where I’m at credit wise before submitting applications. Inquiries count against you – so I want to compare apples to apples.
I guess I don’t get this article. I never go by what each individual credit bureau says my score is because I already knew that each one uses its own proprietary software. I only get my FICO score from MyFico.com. I understood that Fair Issac (MyFico.com) uses the data from the 3 bureaus and then formulates the score.
So are you saying that Experian will now be refusing to provide their credit data on individuals to Fair Issac? So FICO will now be calculated by Fair Issac using only TransUnion and Equifax data and omitting Experian’s?
If Fair Issac will still pull info from all 3 bureaus and formulate its FICO score based on those, so what if Experian won’t allow you access to your FICO score through them. Just get it through MyFico instead.
Am I missing something here?
Basically I am saying that even myfico.com won’t give out FICO scores for Experian.
Your information here is very interesting. I just had a horrible time with Experian – turned into a credit nightmare because I automatically paid my mortgage each month but my property taxes went up. So for three or four months, my payment was about $80 less than it should be. Chase put the entire mortgage into delinquency so it looked like I owed thousands of dollars instead of just under $400. My credit cards automatically required me to pay the entire balance each month (I did that anyway) and reduced my line of credit to $1500! Even though I disputed everything and it has been removed, I am still having problems. It seems like Experian is trying to game the system with its scoring. Doesn’t there seem to be a conflict of interest that a company that controls my access to credit can own lowermybills.com, a company that trolls the web for customers looking for mortgages?