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FICO Suing the Credit Bureaus Over VantageScore

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Last updated on July 23, 2019 Comments: 6

Fair Isaac, the company that created and owns what is generally known as your credit score, is suing Experian and TransUnion, two of the three credit reporting bureaus, for creating a competing product that blurs the line between the “real” credit score and the others. The third credit reporting bureau, Equifax, agreed to settle with Fair Isaac. Fair Isaac uses data from the three bureaus to determine the main credit score used by lenders, security companies, employers, landlords, and many others. This is the FICO score. Fair Isaac has also been developing a new and improved score, FICO 08, used less frequently.

After years of selling their own credit scores to customers — “FAKO” scores — the credit bureaus worked together to create VantageScore, a product to compete with the FICO score. The bureaus claim the VantageScore is more accurate for determining the credit risk of an individual, but Fair Isaac believes the credit bureaus have marketed the VantageScore as if it were the “official” FICO score and the VantageScore infringes on Fair Isaac’s copyright.

There is always an advantage to having competition in the marketplace, but in this case, competition and the lack of clear marketing creates confusion. An individual’s credit score can vary wildly from one company’s calculation to another. It’s also important for consumers to know exactly what they are buying, or even accessing for free.

Even with CreditKarma, which promises to provide your real credit score for free thanks to the support provided by advertising, there is no indication on the website to explain which credit score you are receiving. It is my understanding that CreditKarma receives the score from TransUnion, but it is unlikely they provide the FICO score used by the vast majority of lenders. If it were, CreditKarma would be advertising the fact that you can receive your FICO score for free.

Fair Isaac wants customers to go directly through Fair Issac, and only Fair Isaac, to obtain your FICO credit score. Through myFICO, Fair Isaac charges $15.95 for the “standard” FICO score, and they want to stop credit bureaus from selling or offering products that are confusingly similar to the FICO score.

Article comments

Tally says:

Vantage score hurts people. What it does is it sees if you are using your total credit limit. If you do that, it decides you are a credit risk and then the creditors start to reduce your credit lines because they “think” you may default even though you are paying everything on time. This is detrimental to commissioned employees that may use their credit lines while not receiving income and then when they get paid, they pay off all their credit lines. With this practice of decreasing credit lines, you can actually put someone in the position to default because they haven’t received their commission yet and now they can’t use their credit line to pay bills even though they haven’t been late with their payments.

Anonymous says:

Has anything come out of the lawsuit? The credit bureaus (Transunion in particular) are still marketing their score very confusingly. Besides, most consumers don’t even know what the Vantage score is! Very annoyed right now, the feds need to step in and force to state clearly that the score is not a FICO score!

Anonymous says:

I totally agree. with Mark’s comments. These companies, other than the credit bureaus are making their own comments. I have been searching the computer for the name of the companies that pull the FICO scores for various companies in order to rebuke their statements.. My main concern on my credit score is “Too Many Inquiries” There is no way that can be removed from a credit bureau because when you go to the Credit Bureaus, they say you have to go to the FICO score companies which one never knows who is determining these factors as the Credit Bureaus don’t give that information. The company that pulls the FICO score is listing that as a reason . Even though I have good credit a score of 710, I am jeopardized because too many people have pulled my credit and I have not applied for any credit in years, yet this comes up when I do apply.. There is no way to get that statement removed from a FICO score with the credit bureaus. Someone needs to address that issue. with the credit scoring companies using that statement in the report. There is no way to contact these companies that are pulling a tri-report FICO score! Anyway, I don’t know of one, does anyone?

Anonymous says:

Could someone please explain to me what gives these various private ‘credit-scoring’ companies the right to lord over American consumers with their unfair regimes? I am of a mind to file lawsuits against each and every one of them.

Anonymous says:

I totally agree with you. Something must be done. We should collect signatures and show the world our demands as American citizens.

Anonymous says:

This is a joke. Not every lender pulls your FICO score…. incase you haven’t noticed, some pull an insurance score, some pull an Experian, TransUnion, etc. FICO is not worried about consumer confusion, they are worried about being the only game in town that can sell financial data to lenders. I worked for a student loan company, and we got a lot of our information from the credit bureaus, and trust me, they gauge you. True market competition should prevail in this case. Your local pizza place wouldn’t have standing in court if the guy down the street claimed to have better crust than him. If people like the product better or its more competitively priced than the competition, you should be able to get whatever you want.
The US workforce has been forced to re-sharpen its skills because of market forces. FICO is no different. You have to innovate, or somebody will come along and do it better than you.