Home > Credit Score > Why Your Lender is Using an Older Credit Scoring Model

Comments 1 Comment

Converting to the Newer Score Version

So why don’t lenders simply switch to the newer version once it’s released?  The latest FICO version, called FICO 8, was released for lender access in 2008-2009, but not all lenders are switched over to that latest version—note, FICO recently shared that approximately 6,000 lenders are now using FICO 8.

[Article: Credit Score Don’t—Signing an Apartment Lease on Behalf of Someone Else]

Some lenders do make the transition to the newer score version relatively quickly, but the majority of larger lenders want to first analyze the newer score to thoroughly understand how it will work for them. Some of the review processes include:

  • Proving via their data and portfolios that the newer score effectively predicts future credit risk.
  • Using measurements and quantification to ensure that the newer version is a better score (more predictive) than other credit score versions currently in use. (Why go through the effort of converting if the newer version is not more predictive on their portfolios?)
  • Understanding how the newer version interacts with the other scores and analytic criteria the lender is using in their processes to review new credit requests.  This needs to be conducted for the various loan portfolios (mortgages, auto loans, credit cards, lines of credit, etc.) as well as on a bank-wide perspective.
  • Ensuring all compliance and regulatory parameters related to score use are reviewed and approved.
  • Making any system changes required to operationally access the score and seamlessly integrate into score use strategies.

A project this large takes time, resources and prioritization. It is important that the lender has everything lined up and ready to go when they flip the switch to the new score version. By the time some lenders have completed this work, it’s time to start again as the score vendor may be just about to release the next redeveloped version!

The score vendor and credit reporting agency partner then need to determine when they will make that most recent version available to consumers. In my opinion, it makes most sense that the version made available to consumers is the same version that the majority of lenders are pulling to make credit decisions. That way, there is a higher probability that the consumer is seeing the same score version that most lenders are seeing.

[Featured Product: Looking for your credit report?]

Pages: 1 2

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Pingback: New Credit Score Could Help Millions, Eventually()

  • Pingback: New Credit Score Could Help Millions, Eventually | Gov Grants()

  • Devin Bent

    A big problem with Vantagescore:

    Through a service purchased from USSA I have daily access to my scores and the underlying reports. These are — as I understand it — Vantagescores. I have found one lender — USAA — who uses the Vantagescores for mortgage decision-making. For reasons not pertinent here, I can’t use USSA.

    How do I find another institution that uses Vantagescores. I emailed and phoned Vantages scores — the first email two days ago without any answer at all. I asked USAA. They don’t know.

    If I call individual lenders, the people who answer phones or email and their supervisors don’t know anything. Even the persons who talk loans don’t seem to know about scores except that they use some. I can’t have them do hard pulls — I’ll just rack up hard pulls and destroy my credit rating.

    I read a Vantage press release that Chase uses them. I went to the Chase website and used their estimator that asks for FICO.

    So have I bought scores that can be used with only one lender?

  • Pingback: Credit Handbook of Credit Scoring Book Reviews Credit | Credit Insurance Tips()

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team