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VantageScore winning FICO lawsuit

By Leslie McFadden · Bankrate.com
Thursday, May 13, 2010
Posted: 1 pm ET

The developer of the FICO credit score got some unwelcome news in its lawsuit against a competitor this week. FICO lost yet another legal round in its four-year fight against VantageScore Solutions LLC and the credit reporting agencies. VantageScore is a scoring model developed jointly by the three major credit reporting agencies. FICO sued VantageScore Solutions and the credit bureaus in October 2006, the same year the product rolled onto the market, alleging that the firms were "engaging in unfair and anticompetitive practices that would harm FICO," according to a press release from VantageScore Solutions.

Last July, a U.S. district judge dismissed FICO's antitrust, false advertising and breach of contract claims. This week the judge denied FICO's motion for a new trial and ordered the cancelation of FICO's trademark for its scoring range of 300 to 850 once FICO's appeal concludes. VantageScore uses a 501-990 score range.

"The court's decision confirms our longstanding position that FICO's claims are meritless," VantageScore Solutions president and CEO Barrett Burns stated in a press release. "Their arguments have failed to convince a federal jury and judge. At every step, VantageScore has prevailed against Fair Isaac's claims. Should FICO appeal, we remain confident we will prevail there too."

In other words, FICO will continue to have competition from VantageScore, which has captured only 5.7 percent of the credit scoring market since its introduction, according to a court order. FICO holds a 74 percent stake.

The VantageScore model uses a single algorithm at each bureau, which can translate to better score consistency when consumers pull their VantageScore credit ratings. Currently, only TransUnion and Experian sell the VantageScore to consumers. Equifax and TransUnion sell FICO scores.

The victory for the credit reporting agencies comes the same week that FICO is announcing a price hike on its scoring products sold through myFICO.com. A newsletter from myFICO today announced an upcoming price increase that goes into effect this Sunday, May 16. If you want to purchase a score monitoring product from FICO, now's the time to do it.

Don't want to pay for a score? You can get a free credit score from certain websites and even estimate your FICO score for free right here at Bankrate.com. You have to pay for your actual score from FICO or VantageScore.

The Fair and Accurate Credit Transactions Act entitles consumers to a free credit report from the three major credit reporting agencies once every 12 months, but not a free score. For your free credit report, head to AnnualCreditReport.com, the only authorized source for free credit reports under federal law.

Readers, how do you feel about credit scores other than FICO? Have you or do you check other credit scores?

Follow Leslie McFadden on Twitter.

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3 Comments
Clarissa Pace
May 17, 2010 at 4:19 pm

I think this is all terrible and inaccurate. It is evident that the credit scoring is big business. The American people just better wake up and learn what is happening to them before they are suffering any more than we already have.

Debra James
May 13, 2010 at 3:50 pm

I just want to get my score from the same agency that my existing or potential creditor is using, because I want to be as informed as possible before making any new credit decisions. It makes no sense to me to get a credit score from company A, and the bank or creditor is using company B. Your information is inconsistent with theirs, and it limits your negotiating and shopping (comparing options) tactics. Since the scoring algorithms are so different between Vantage and FICO, you may think your score is one number, and find out it is significantly different when presented a different agency's number. As long as FICO has approximately 3/4 of the credit reporting market, then I'll probably still obtain my FICO score.