A Fight Over Credit Scores Turns Into All-Out War (msn.com) 53
A long-simmering battle over who controls credit scoring in America has erupted into open warfare. Fair Isaac, whose FICO score is used in about 90% of consumer-lending decisions in the U.S., announced it will double the price of its mortgage credit score to $10 next year. The company also said it will bypass the three credit-reporting firms that have supplied the data feeding into its algorithm for decades.
Equifax, Experian and TransUnion created VantageScore in 2006 as an alternative to FICO and collectively own the scoring system. The move came months after Bill Pulte, head of the Federal Housing Finance Agency, announced that Fannie Mae and Freddie Mac would allow lenders to use VantageScore for mortgage approvals. The three credit-reporting firms responded by offering VantageScore free for many loans. Fair Isaac had charged a few cents per score for decades before chief executive Will Lansing began raising prices several years ago. Revenue from selling credit scores reached $920 million in fiscal 2024, nearly five times what it was a decade earlier.
Equifax, Experian and TransUnion created VantageScore in 2006 as an alternative to FICO and collectively own the scoring system. The move came months after Bill Pulte, head of the Federal Housing Finance Agency, announced that Fannie Mae and Freddie Mac would allow lenders to use VantageScore for mortgage approvals. The three credit-reporting firms responded by offering VantageScore free for many loans. Fair Isaac had charged a few cents per score for decades before chief executive Will Lansing began raising prices several years ago. Revenue from selling credit scores reached $920 million in fiscal 2024, nearly five times what it was a decade earlier.
I was promised an earth-shattering KABOOM! (Score:4, Insightful)
Headline promises open warfare. Summary says the price of a FICO score is going up $5. Weak sauce.
Re:I was promised an earth-shattering KABOOM! (Score:5, Insightful)
Yeah, but it was just a few pennies to have the *license* to do a little math a few years before that. Then someone decided they could screw over banks, and the banks realized, "Now wait just a darned minute. We know how to do math, too." and they created a new credit score, with blackjack, and hookers.
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I think the key was to get the government securitizers (Freddie Mac and Fannie Mae) to accept their new credit score. But they have people for that too. Possibly including blackjack dealers and hookers (or more likely "procurers").
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Hopefully this results in a smackdown (Score:2)
$10 for a hard pull seems crazy, hopefully the rest of the banking industry destroys these rent seeking assholes.
Re:Hopefully this results in a smackdown (Score:4, Insightful)
What kind of world are we living in when we're rooting for the banks to win in this fight?
Re:Hopefully this results in a smackdown (Score:5, Informative)
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People can't tell the difference anymore. Nuance is dead even when it's not at all subtle; if it's 99.99% you'll ignore reason for that 0.01% that appeals to you.
People can't detect evil even when he posts images of himself made up to be Thanos and practically paraphrases cliche monologues of cartoon villains about how weak the good guys are (for limiting themselves) and is a poster boy for most the 7 deadly sins...and idolizes dictators...
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$10 for a hard pull seems crazy, hopefully the rest of the banking industry destroys these rent seeking assholes.
$10 one-time cost vs. years of potential revenue from credit interest. Per person.
Banks didn't get rich worrying about penny costs.
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Yeah, but just think about all the pre-approved credit offers you've received... multiply that by $10 each.
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Pretty sure those mailings aren't hard-pulls; if they were then everyone would have a rock-bottom score from all of them.
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VantageScore came into being because the CEO steadily jacked up the price of a hard pull by thousands of percents.
The Big 3 came up with their own score, and FNMA+FHLMC will now use it.
What makes this news, is that the free market.... actually fucking worked.
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Cause and Effect. (Score:2)
Equifax, Experian and TransUnion created VantageScore in 2006 as an alternative to FICO and collectively own the scoring system. The move came months after Bill Pulte, head of the Federal Housing Finance Agency, announced that Fannie Mae and Freddie Mac would allow lenders to use VantageScore for mortgage approvals.
Uh, yeah. That "move" also started an avalanche of NINJA (No Income, No Job) Applications that ultimately created the largest housing crash in American history, triggering a larger global meltdown a mere two years later.
Let's ensure we wisen the fuck up as to what the Three Credit Hens try and shill for next time.
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Well when you put it that way, I guess I better start cheer leading for the credit assholes. If what you say is true, that they caused the last housing collapse, then I need them to do it again, pronto!
I always thought the housing crisis was caused by the banks providing loans to losers and then bundling those loser loans into sell-able securities. When the loans started to get defaulted on, this cascaded and took out the folks holding these "junk" securities that they thought were better quality investment
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Of course, the reason the banks decided to make so many bad loan offers to losers was direction from government and lawmakers.
You were doing quite well, but tripped just before the goal line. The government action you are talking about was "You need to stop redlining", which was a way to deny mortgages to minorities without saying you are denying mortgages to minorities. That was not a major cause of the crisis, though people who want to redirect blame have talked about it so much that gullible folk have started to believe it. The cause was the banks offering large mortgages to people who could not afford them (falsifying the do
Re:Cause and Effect. (Score:5, Interesting)
The government was the originator of redlining, and it was quite openly about denying mortgages in minority areas. The redlining maps were created by the FHLBB and the HOLC, both New Deal government corporations. This was ended in 1968.
The Clinton changes were designed to increase loans to poor people. And they did. But this turned out to be a bad idea.
\o/ (Score:1)
The whole premise of the credit scoring system is bullshit: people *pay* to gain access to someone else's flawed assessment (1) of their worthiness to get ass-fucked by greedy cocksuckers who are using the banking industry as a condom for protection from the side-effects of their actions.
(1) in a way which is unrelated to reality
Re: \o/ (Score:2)
Never underestimate the value of shifting responsibility onto someone else. If an individual manager at a bank had to make the call in order to approve a loan, it would be too much pressure and most of them would fail at doing it. But if they can pay some self-described expert to distill the decision into a simple metric, then if it doesn't work out the banking management can just shrug and point at it being bad luck. Because they used the industry-accepted expert, so now nobody is to blame.
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One fix would be to remove the ability of one group to enslave another using the other's desire to have things they can't afford and instead teach people to generate wealth for themselves, not for those who already have wealth but want more from the effort of others.
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It sounds like a different kind of suck rather than a superior solution though. Credit is a solution to a problem you'd be re
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> Credit is a solution to a problem :-)
The problem is "we have a bunch of money and want to grow it with zero (or lower) risk to ourselves" not "how can we buy a house we cannot afford now". Credit exists more for the lender - that's why they have all the power in contracts but it's presented as an problem encountered by suckers, I mean home buyers
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Perhaps there's a future where 'in Communist Russia, big business gets ass-fucked by powerless 'electorate'" to help them understand the problem and thus be incentivised to fix it.
I'm so sick of this shit - every day <yet another person or group with power fucks everyone else to demonstrate how not to do civilisation>
What the fuck is wrong with people? Seriously? How can these people be in charge of anything more important than which sandwich filling to add when they have empty space where their moral
The score is B.S. (Score:1)
The consumer thinks that having a great score means you're going to get any loan from any lender you want at a fabulous rate. That's totally false. Banks only care if they can make money off of you. A great score means you pay things off quickly. To a lender, that means they can't suck interest out of you.
Re:The score is B.S. (Score:5, Insightful)
As a person with an 800+ credit score, I can confirm that I can get credit anywhere I apply for it, at the best rates available, even though I pay off my credit card bills in full every month, and have no other debt. Last year I applied for a new credit card with a better cash back rate (2% on everything) and had zero issues getting it. I've also had no issues getting a Chase HELOC with zero closing costs (that account is now paid in full).
Lenders make money off of you even if you don't pay interest. Credit cards make money on every transaction. Other lenders make money from the origination of the loan and from fees. Sure, they like "sucking interest" but it's not their only money-making gig.
Grandma's advice is still good. Pay your bills, don't carry debt, spend less than you earn. Even in a world of credit scores, the advice still works.
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Coming from a guy called Tony Isaac? Yep, username checks out.
(But yeah, I have much the same experience, though I do have a mortgage also)
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Despite the name, I'm no relation to Earl Isaac of Fair Isaac.
Had a mortgage, paid it off. The payoff did not ding my credit in any way, even though that was 12 years ago.
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As a person with an 800+ credit score, I can confirm that I can get credit anywhere I apply for it, at the best rates available, even though I pay off my credit card bills in full every month, and have no other debt. Last year I applied for a new credit card with a better cash back rate (2% on everything) and had zero issues getting it. I've also had no issues getting a Chase HELOC with zero closing costs (that account is now paid in full).
Lenders make money off of you even if you don't pay interest. Credit cards make money on every transaction. Other lenders make money from the origination of the loan and from fees. Sure, they like "sucking interest" but it's not their only money-making gig.
Grandma's advice is still good. Pay your bills, don't carry debt, spend less than you earn. Even in a world of credit scores, the advice still works.
I largely agree, however one minor point of order is that banks rarely make interest off people who don't repay their debts. So someone who is at risk of defaulting is going to cost, hence organisations that give easy credit to anyone like Klarna are in dire straights. Whoda thunk you'd lose money by lending it to people who wouldn't pay it back.
What they want are people using credit (preferably exclusively) but paying it off every month, hence people who have credit cards but don't use them are often ca
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There is a wide gap between borrowers with very high credit scores (the kind I described) and very low credit scores (the kind you described). In between, is a large group of people who borrow regularly, carry a balance, but also pay their bills. Banks indeed do make a lot of money from interest payments from these people, especially credit card balances, as the interest rates for credit cards is usually above 20%.
I don't think credit scores are Orwellian. They are just one tool a lender has to help them wi
Re: The score is B.S. (Score:2)
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In fact paying off loans off completely often lowers your score for a bit, since it can drop maximum age of credit lines and mix of credit.
Which is exactly what the OP was implying: that credit scoring often penalizes actions which should be seen as responsible. Paying off your debts early and not overextending yourself with 10 different credit cards are signs of financial responsibility, but if you're playing that game they'll slap you with the "thin file" excuse.
Fair Isaac (Score:1)
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Before Fair Isaac, credit decisions were arbitrary and made based on an individual lender's discretion. Do you think that was more fair to people who wanted to buy homes or food?
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That level of interaction has largely gone away, as have those small local banks. Instead, we have FICO and credit agencies. I'm not sure that we
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I'd suggest that in that oh-so-comfortable fairy-tale past, decisions were arbitrary and not based on factual or consistently applied rules. If the loan officer liked you, you got a loan, if he didn't, you didn't. That doesn't seem better to me. FICO might not be perfect, but it at least consistently applies the same set of rules to everyone.
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Fair Issac was suppose to take out gender/racial and other biases from lending. It was supposed to be a way to subjectively evaluate applicants.
Fair point, but the last housing crash and global financial crisis was caused by lenders "evaluating" applicants with a damn mirror under their nose, back when loan approvals were as easy as breathing.
Not sure what they think they're supposed to do anymore, other than try and get away with fiscal murder on behalf of the shareholder demanding it under the guise of fiduciary responsibility.
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Trans Union in Canada had alternative in 1999 (Score:4, Interesting)
Your score is based more on who you are than what you do. It is highly correlated with ethnic back grounds, parents income and where you lived. Does your spouce have the same last name as you, is your name in the top 100 names of the year you were born.
Your score was heavily based on where you lived even though using address wasn't legally allowed using coordinate location was.
Trans Union Canada came up with two scores instead. The first score was how likely a credit file or applicant was fraudulent. The second score was the likelihood of defaulting. By removing the fraudulent files we could stop using location for the scores and significantly decreased the dependency of the score on things a person had no control over.
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The scores are quite arbitrary - there are a bunch of numbers and factors, and often the actual number the lender sees is quite different from the number they show you.
https://www.cbc.ca/news/busine... [www.cbc.ca]
If for some reason you want the video form, https://www.youtube.com/watch?... [youtube.com]
Re:Trans Union in Canada had alternative in 1999 (Score:4, Insightful)
Yes, that's what it's supposed to do.
It may in fact be correlated with these things (because they're correlated with likelyhood of default), but it's not based on them. Some of those aren't even in the credit report the score is based on. Location isn't used in the FICO score.
Doesn't Matter (Score:2)
Both are terrible systems that end up preying on those with crappy scores - regardless of whether the crappy score is caused by stupidity, negligence, or bad circumstance.
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In my world, the concept of loans and credit don't exist to begin with.
Credit scoring (Score:2)
Who exactly is getting killed? (Score:1)
Oh, nobody? Then it's not a war.
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