How does everyone feel about what the article below addresses.?

Its long but well worth the read, it's very informative.

Equifax, Experian and Transunion have begun limited marketing of a new consumer credit scoring algorithm to Risk Based Lenders. According to David Rubinger of Equifax, the planned nationwide rollout to Risk Based Lenders is scheduled for July, and will be followed, approximately 9 months later, with the public disclosure of these scores to consumers.

An algorithm is a mathematical formula that is written to assign value to specific data in order to attain a final score. Risk Based Lenders are financial institutions that lend money based upon a consumer's credit history and the consumer's ability and historical willingness to repay a loan. These types of lenders cover the full range of financial institutions lending money for credit cards, auto loans, unsecured loans and mortgage loans.

David Rubinger, the national marketing contact for Equifax, explained "approximately one year ago, the analytical managers for the 3 credit bureaus got together for the purposes of addressing variations within the present scoring models in use. Under the current system, the three major credit-reporting agencies use three different algorithms that produce three different and unique scores, regardless of the data being scored. The primary issue to be addressed was how they could create a solution for Risk Based Lenders who wanted fewer variations within the credit scoring models they were using to make lending decisions."

The solution for the three agencies was to create a single algorithm that would produce a more "predictive score" by creating a single variable in scoring, which would be the data. To do this, they came up with a solution that involved creating an independent company called VantageScore, LLC. Each credit-reporting agency would own an equal share in the company, and purchase a license to use and sell the resulting scores to risk based lenders under the VantageScore service mark. The hard part was creating the uniform scoring that the three credit-reporting agencies were attempting to design and sell.

To achieve as close a model as possible, the three credit agencies tested the initial base algorithm on 15 million active credit files. Throughout the testing process, changes were made to the algorithm as were needed to create a more stable scoring model until the finished product created an acceptable level of score variance in the finished product.

By creating an independent LLC company, the three credit reporting agencies are now able to offer a single product that has only one variable, the data being scored. Where the credit information reported is the same, the score for a consumer file will be the same, regardless of whether the score comes from Transunion, Experian, or Equifax. Where the credit information is different, the variations in the actual score will be significantly reduced.

Under the new VantageScore product, the three agencies decided to change the scoring formula from its current 450 to 850 scoring range to a new 501 to 990 range. When asked about why they would do this, Rubinger responded, "The new scoring model is to help consumers better understand their credit score. By basing it on a grading scale used throughout the K through 12 school system, consumers can look at their score and know exactly what they have". Unfortunately for Risk Based Lenders, the new scoring model will require they spend thousands of dollars in updating software to incorporate the new scoring model.

When asked about some of the negative aspects of the change, Mr. Rubinger declined to answer any questions.

The initial question that Down Payment Solutions has relates to anti-trust laws and where the congressional oversight is. As we only have three major Credit Reporting Agencies, how is it they can bypass any oversight to create an LLC company in order to offer a single uniform product in which all can sell, with the goal appearing to be the complete replacement of the present day independent scoring algorithms?

When contacted for comment on this matter, the Department of Justice - Anti-Trust division - declined comment and suggested consumers who have concerns should e-mail them at Neither Senator Bill Nelson (D - FL), Senator Mel Martinez (R - FL), Congressman Jim Davis (D-FL) or Congressman Michael Bilirakis (R- FL) offices would offer any comments for this article.

Jan Helder of the Helder Law Firm called the formation of a LLC by the three Credit Reporting Agencies "shady, at best" and advised that, unfortunately for consumers, they "cannot file an anti-trust suit until they have experienced a financial loss resulting from the new VantageScore credit scoring system, and then they will have to prove financial loss in court." This will be well after low to moderate-income families, and the businesses dependent upon them, have felt the tightening of credit nationwide.

"The new VantageScore model creates a significant financial risk to consumers in their ability to obtain affordable financing," according to Dwayne Singletary of Allstate Mortgage and Loan Corp in Tampa, Florida. "Many risk-based lenders in the mortgage industry use all three credit-reporting scores--also known as a Tri-Merged Credit Report--and have programs that allow them to use the credit-reporting agency that has the highest credit score. A reduction in that higher score will most likely result in home buyers needing more money out of pocket for a down payment, or require them to pay a higher rate of interest…" under the VantageScore model, whether refinancing or purchasing.

In the installment and revolving credit market, most risk-based lenders do not use the scores from all three reporting agencies. Rather, each lender selects the reporting agency that best fits their type of borrower. A reduction in any one score across any credit-reporting agency, via adoption of the VantageScore algorithm, could result in consumers being unable to obtain credit, or consumers paying a significantly higher rate of interest to borrow the same money tomorrow, versus what they would pay under the current separate credit-scoring models.

Rubinger contends the new scoring model is designed to help consumers better understand their score. However, given the thousands of dollars in financial costs that will be incurred by Risk Based Lenders in updating programming, it leaves the impression the new scoring model may actually be designed to mislead consumers into believing the new VantageScore system actually improves their credit scores.

Under the current system, in theory, if a consumer has a Transunion credit score of 600, then potentially under the new VantageScore model, they could have a score as high as 720. This certainly would go a long way towards silencing a potential consumer backlash if someone with challenged credit sees a dramatic increase in their credit score. This is potentially misleading, and may be the reason for the delay in consumers having access to their new VantageScore credit score for any given credit-reporting agency.

At present, it has not been disclosed how consumers will know what model they are being scored under. As consumers apply for credit, most will assume they are being scored under existing Credit Models, when in fact; they may have been scored under the VantageScore system if a particular financial institution adopted it.

Consumers who are concerned about the potential implications that VantageScore has on their financial future should contact the DOJ - Anti-Trust Division. In addition, we strongly encourage you to contact your Congressman via

Down Payment Solutions believes that before this new Credit Scoring System is implemented, both the DOJ and Congress have some over sight as to how, when and if Transunion, Experian and Equifax, can implement this type of product in order to protect every American consumer and the businesses dependent upon them.

You are free and encouraged to reproduce, link to, e-mail and redistribute this article in its entirety as long as you leave the below author information intact.

Author: George Chaney, President, Down Payment Solutions, Inc.

3 Answers

  • 1 decade ago
    Favorite Answer

    This has been coming for a long, long time. I first read about it almost 10-months ago. It was supposed to have been in place by the end of last year but did not make it.

    As far as what I think about it, what choice do we have except to sit back and see how it works. One of the largest problems we have in the world of finance is that there is so much of a difference in the three scores. At least this will eliminate this problem.

    Source(s): Finance Manager for ove 7-years.
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  • 4 years ago

    First, there is a lot of the NO excuse crowd here. It is way to easy to tell someone to be angry and dump him. They have no real emotional investment or interest. I'm also of the opinion that they have not had to deal with the issue in their own marriage so their opinion is not tempered by life experience. Your marriage can recover from infidelity but its not quick or easy. If it does you will be stronger. It takes a new commitment with new rules. As the victim of infidelity the big question is always WHY? In a lot of instances it catches you unaware because the spouse never communicated a problem that would cause it. If there is any way to get over it in your mind ( assuming you are the victim) it is that he must give you an honest reason. The" I made a mistake" story is not acceptable. There was a reason for him to jeaprodise your marriage. The only way you will know that it is not going to happen again is if he understands what truly caused it in the first place. It may be as simple as his insecurity. Dr. Joy Browne often describes the three questions which must be answered before you can move on which are, Why did it happen, How will it never happen again and What happens if it does happen again? It seems sensible to get it out now so you can recognise the symptoms. Even more important that he recognise the symptoms and already knows the consequences. People are not infalible. We all make mistakes of judgement . This is an area where second chances might be in order. You can get over it but it takes a long time. This is possibly the most painful thing he could do to you. If you chose to stay, he needs to let you know what happened. I for one am glad I was not of the "dump the *****" belief. That would have meant a 5 year marriage not 30+ and no sons of which I am very proud.

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  • 1 decade ago

    im sorry but i cant read should have just put some of the highlights in with the link for the option of reading if someone is interested

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