http://home.businesswire.com/portal...d=news_view&newsId=20060314005725&newsLang=en VantageScore(SM) to Set New Standard for the Marketplace - TransUnion Says CHICAGO--(BUSINESS WIRE)--March 14, 2006-- New Score to Fill Void of Consistency and Choice in the Industry TransUnion today released an industry first in the area of scoring models - VantageScore(SM). The new score is the first of its kind to leverage a consistent scoring methodology across all three national credit reporting companies. VantageScore brings clarity to businesses and consumers through an easily interpreted numeric score, and choice to the marketplace with a new, highly predictive scoring option. Extensive testing throughout the VantageScore development process has shown that it outperforms and is more predictive than other commercially available models in the marketplace today in projecting short-term delinquencies. With its introduction, TransUnion has established a dedicated implementation team to work with customers to analyze and test VantageScore with their portfolios and to assist them in activating it with their internal processing systems. "As markets have matured, so have customers' needs," said TransUnion's Chet Wiermanski, one of the creators of VantageScore and vice president of Analytics for the company. "VantageScore represents TransUnion's on-going commitment to proactively address the needs of our customers by developing highly predictive risk models." The score is unprecedented in that it looks at and analyzes data at the same point in time on the same consumer records from all three national credit reporting companies. VantageScore was developed using a national sample of anonymous credit information of approximately 15 million consumers and uses a score range of 990-501 and score groupings that approximate the familiar academic scale: -- 901-990 A -- 801-900 B -- 701-800 C -- 601-700 D -- 501-600 F "By developing a patent-pending approach to consistently interpret the credit information stored within each credit repository, also referred to as characteristic leveling, any credit scoring differences between the credit reporting companies can be attributed to data differences in a consumer's credit file rather than data interpretation - as is the case in most scoring models today," said Wiermanski. "With VantageScore, a significant achievement is accomplished by creating this consistent scaling across the credit reporting companies; an approach we believe is long overdue and will be universally embraced." One of the leading experts in the industry in the areas of scoring and analytics, Mr. Wiermanski was responsible for implementing TransUnion's first scoring systems for a variety of industries. He has done extensive work in the areas of predictive modeling and the use of event-based triggers and is the author of numerous white papers and studies on the subject. He also is an active member of Georgetown University's Credit Research Center. To learn more about VantageScore or to schedule an interview with Chet Wiermanski, please contact Clifton M. O'Neal at 847-722-4843, Jason Nierman at 312-985-3059 or Jeff Bodzewski at 312-729-4270. About TransUnion TransUnion is a leading global information solutions company that customers trust as a business intelligence partner and commerce facilitator. TransUnion offers a broad range of financial services that enable customers to manage risk and capitalize on market opportunities. The company uses advanced technology coupled with extensive analytical capabilities to combat fraud and facilitate credit transactions between businesses and consumers across multiple markets. Founded in 1968, Chicago-based TransUnion employs 4,100 associates that support clients in more than 30 countries. Visit us at TransUnion.com. Graphics and/or photographs to accompany this release can be obtained by members of the media by contacting Jason Nierman (jnierma@transunion.com) at 312-985-3059 or Cliff O'Neal (coneal@transunion.com) at 312-985-2540 or 847-722-4834.
GIGO = Garbage In - Garbage Out. The problem with scoring is NOT implementation of consistent scoring across the three CRAs, nor is it a great innovation to match the arbitrary academic grade scale. The main problem IS maintaining accuracy in the CRA files, and it is hampered by the remaining lack of transparancy to the consumer of the information in those files. Even key information such as complete an accurate creditor contact information, necessary to consumers for accellerating correction of errors, and accurately reported dates of first delinquency, necessary for ensuring legal removal of obsolete data, are often missing in disclosed reports, yet the CRAs tolerate these deficiencies in reporting by their clients. In addition, as the levels of erroneous data from either identity theft or other identity mix-ups increase, the lack of tracability by the consumer of consumer report data to the original data furnisher will become an increasing impediment to correction and removal of negative "information" totally unrelated to the consumer's credit activities. If you can't audit and verify it, you can't correct it.
Check out what's being said about the new credit system. Consumer-advocacy groups expressed concern that the new scoring system would not eliminate one of the biggest problems in the industry: incorrect information in consumers' credit files. "That means it's a new recipe, but the same old ingredients," said Jean Ann Fox, director of consumer protection with the nonprofit Consumer Federation of America in Washington. "It doesn't address the underlying accuracy of the credit reports on which the scores are based." Stephen Brobeck, executive director of the Consumer Federation of America, said the new score will create problems. "It's a terrible idea. At a time when consumers are just beginning to understand the traditional credit score scale, to change it radically will greatly increase consumer confusion." ANTITRUST CONCERNS? Fair Isaac Chief Executive Tom Grudnowski said in an interview that FICO scores are deeply embedded in the way lenders evaluate loan applications. The biggest challenge for the credit bureaus, he says, will be to prove that their score is so much better that it justifies ripping up the way they do things now. Says Grudnowski: "There's got to be a really compelling reason to convince an institution to change." There's also the question of whether the close collaboration between three industry rivals could be perceived by antitrust regulators as an attempt to squelch competition and raise prices. A Justice Dept. spokeswoman on Tuesday said the department would have no immediate comment. A Federal Trade Commission spokesman did not immediately return a phone call. Only time will tell how they rate VantageScore. My question is how will current scores be rescored (ie a 750 under FICO sysem is an A+ under new system a C)? PREVIOUS CREDIT SCORING SYSTEM - FICO Credit Credit score A+ 720 & Above A 700 - 719 A- 680 - 699 B+ 660 - 679 B 640 - 659 B- 620 - 639 C+ 620 - 639 C 600 - 619 D - F 599 & Below NEW CREDIT SCORING SYSTEM A 901 - 990 B 801 - 900 C 701 - 800 D 601 - 700 F 501 - 600 Also under FICO system A- papers could have rates 1% - 1.75% higher than A papers B papers could have rates .25% - 0.75% higher than A- papers C papers could have rates 0.75% - 1.5% higher than B papers D papers could have rates 1% - 1.75% higher than C papers The interest rates for A-, B, C or D papers, could vary vastly from lender to lender. Who will really make out under new system?
One advantage: The current system is nebulous enough that it is harder to show how much a FICO point shift is directly responsible for credit damages. With the new, more "understandable" system, we will all think we know what it means. We can now just explain to a jury that the defendant's actions tanked my score from an A to an F, and everyone "knows" that is BAD, even if they have no understanding of how the grade was even arrived at. One disadvantage: Increased "standardization" across CRAs, with a small number of "grades", makes implicit collusion in fixing credit terms easier. Everyone can just stick it to the "C" borrowers, knowing no-one else will give them a better deal, even if they just tipped below "B". In effect, the use of grades potentially standardizes the lender decision points. This is harder to do with more smoothly varying scores.
