An Invisible Lawsuit Whose Outcome Will Affect Consumers
From a subscription-only October 12 story at CardForum’s CardLine (para breaks added by me), this is no real surprise:
FAIR ISAAC SUES CREDIT AGENCIES ON VANTAGESCORE
Fair Isaac Corp. has sued the three national credit-reporting agencies on antitrust grounds over the VantageScore credit-scoring model they launched this year. Fair Isaac filed the suit yesterday in federal court in Minneapolis against TransUnion LLC, Equifax Inc., Experian Information Solutions, and their jointly owned unit VantageScore Solutions LLC. Fair Isaac, developer and owner of the widely used FICO score, is based in Minneapolis.
Fair Isaac alleges that the four firms are engaged in “unfair and anticompetitive practices that harm the FICO credit score brand and goodwill.” Fair Isaac CEO Tom Grudnowski said in a statement that the partnership between the “three powerhouse agencies unfairly threatens our ability to compete, and inhibits … innovation, choice and competition in the credit information marketplace.” Fair Isaac claims the three agencies have the power to set prices for both the FICO score and the VantageScore that they sell directly to lenders.
Equifax responded in a statement that VantageScore increases competition and provides more choice. Christopher A. Callero, Experian Americas CEO, told CardLine this week that VantageScore is being used or tested by over 600 clients.
The Money Tip of the Day is that if you’re waiting for the appearance of VantageScore, whose overhyped announcement I noted earlier this year, to occur any time soon in hopes that competition will lower costs, forget about it. If you need to know your credit score, find the best deal you can, either through the bureaus (Experian, Equifax, or Trans Union), or by working directly through Fair Isaac’s MyFICO.com site. A quick look at the three bureau sites indicates that Equifax is still leveraging the FICO score, while the other two, if they are even using FICO any more, are hiding it well.
