Saturday, April 29, 2006

Fair Isaac's reaction to Vantage Score System

Fair Isaac's reaction to Vantage Score System

Heard about the new Vantage Scoring System? It's scheduled to be rolled out by the credit bureaus later on this year. This was posted on our discussion boards by a Fair Isaac employee (Fair Isaac created the existing model the credit bureaus use). The post can be found here. Yes, I believe the poster is an actual employee.

Before I share this info... Yes I am a Fair Isaac employee. And yes I obtained prior approval from our PR dept before posting this. This document was posted on our Intranet site last week.

March 23, 2006

On March 14, 2006, the three national credit reporting agencies, Equifax, Experian and TransUnion, jointly announced the creation and availability of VantageScore, a new credit risk score. According to their announcement, the new score was developed through a collaborative effort by all three credit reporting agencies. The score is being independently marketed and sold through each of the three credit reporting agencies via licensing agreements with VantageScore Solutions, LLC, a company that the agencies have established. The following FAQ provides answers for use by Fair Isaac employees to the most common questions directed to Fair Isaac in the days immediately following their announcement.

Q: Did Fair Isaac help develop the new score?No. Fair Isaac was not involved in the development of the new score, and any questions regarding VantageScore from sources outside of Fair Isaac should be directed to Equifax, Experian and TransUnion.

Q: Who has more experience in credit bureau-based risk scoring, Fair Isaac or the credit reporting agencies?Fair Isaac has the most experience. Behind our FICO® scores’ unsurpassed performance is 50 years of analytic expertise and 25 years of analyzing credit reporting agency data. We developed the first credit risk score in 1958, the first credit reporting agency score models in 1981, and launched the first general-purpose FICO score in 1989. Our analytic scientists have the most experience studying the nuances of data, allowing us to make the scores more powerful with each redevelopment.

Q: Is there a market for the new score? At this point, we don’t know enough about the underlying science of the new score to comment in detail.However, the ongoing – and growing – success of the FICO score demonstrates that Fair Isaac is already meeting the market’s demand for a consistent measure of credit risk across the three credit reporting agencies. FICO scores have been available since 1989 and are used by most lenders when making billions of credit decisions annually. FICO scores are routinely tested and have become relied upon by lenders, rating agencies, the Wall Street community and a growing base of consumer advocates and personal finance experts. Fair Isaac credit bureau risk scores provide a common language for risk in many industries, including consumer credit, commercial credit, mortgage and telecommunications. They are endorsed or used by such industry-leading organizations as Fannie Mae and Freddie Mac for secondary mortgage lending, and Standard & Poor’s and Fitch IBCA in the rating environment.

Q: Will the introduction of the new score hurt Fair Isaac?We are confident that, provided a choice, lenders will continue to rely upon FICO scores to make the most objective, fair and profitable risk management decisions. Competition has been a fact of life in our industry, and the individual credit reporting agencies have attempted in the past to compete with Fair Isaac by offering scoring alternatives. Yet, FICO scores have continued to be used by the vast majority of banks and lenders in the United States to make the smartest possible lending decisions and grow more profitable. This is the first time that the credit reporting agencies have coordinated their efforts to develop a new risk score and we will monitor lender reactions and take all steps necessary to ensure Fair Isaac remains lenders’ scoring system of choice.

Q: Will the new score replace FICO scores in lenders’ risk evaluation process?Based on what we know now, as long as the market is free from competitive restraint, competition from FICO scores (both Classic and NextGen) will be significant because FICO scores have widespread acceptance by consumer lending and securitization users, as well as acceptance by key regulatory bodies as reliable. Their confidence in FICO scores is the result of the FICO score’s proven predictability and Fair Isaac’s continuous work to update and fine-tune our scoring models to ensure the most precise risk predictions and score explanations possible. Lenders and regulators also value our neutrality in the credit data industry and our ability to objectively analyze and utilize credit bureau data – which differs from bureau to bureau – to generate highly predictive, reliable risk scores.

Q: Does the introduction of VantageScore signal a breakdown in Fair Isaac’s relationship with its credit reporting agency partners?No. Even as our partners introduce VantageScore, Fair Isaac is working with each of the three credit reporting agencies to continue delivery of billions of FICO® scores annually to lenders and other businesses. And we are planning to introduce additional products that Fair Isaac is developing in collaboration with the credit reporting agencies. Of course, we cannot speak to the intentions of the credit bureaus.

Q: How does the new score’s scale differ from the FICO scoring scale?According to the credit reporting agencies, their VantageScore uses a numeric scale of 501-990, and also a parallel alphabetic scale that classifies consumers into fixed A, B, C, D, F scoring 2 grades. These alpha grades strongly suggest that all lenders agree on levels of risk in neat, permanent scoring bands, which is contrary to Fair Isaac’s long experience with lenders. Again, we cannot comment on a system we have not yet seen. However, Fair Isaac can say that the FICO scale has served lenders and consumers well for decades, and is increasingly being understood and accepted by consumers as the standard score range. The classic FICO score uses a numeric scale of 300-850 that is well understood and accepted within the financial services industry and regulators. Most lenders’ strategies and securitization decisions within this industry are geared toward the use of the FICO score ranges and consumers. A new, different score range could create confusion for consumers and lenders alike.

Q: What does this different approach mean for consumers?At this stage, we don’t know enough about the new scoring system to comment in detail. However, a number of consumer groups, including Consumer Federation of America, have expressed the concern that the introduction of VantageScore adds confusion to a marketplace already filled with consumer misperceptions about credit scoring. Today, consumers can view their FICO credit scores and be confident that the scores are an indication of how most lenders view their credit risk. We will continue our efforts to help consumers understand that FICO scores are the same scores most lenders use now – and will continue to use – to make their lending decisions. is the one place where consumers can access their FICO scores across multiple credit reporting agencies and receive education from Fair Isaac on managing their credit scores.

Q: The three companies say this new score was developed in response to client demand. Have lenders been asking for a new scoring system?No. Fair Isaac stays in close contact with all the major U.S. lenders, and none of them have reported to us a desire for a new scoring system. Originally introduced in 1989 and available from all three credit reporting agencies since 1991, our FICO® scores have provided the same consistent and highly effective predictive power regardless of the credit reporting agency providing the data. We have regularly updated and improved our FICO scoring models in response to open feedback from major lenders.

Q: The bureaus claim that the new score uses the same scoring model across all three credit reporting agencies. How is the FICO score approach different?Each of the credit reporting agencies deploys the Fair Isaac scoring model design for Classic FICO scores and NextGen FICO scores. We believe our design utilizes the most predictive elements at each of the agencies to ensure highly predictive performance at each of the agencies – and to ensure that lenders can trust that a 680 FICO score generated on one bureau’s data 3 indicates the same relative level of risk as a 680 FICO score on another bureau’s data. Fair Isaac believes that every FICO score should be as predictive as possible based on the available data.

Q: How will the introduction of the new score impact have confidence that will continue its impressive growth as consumers understand that FICO scores continue to be the scores that most lenders use to make credit decisions. In fact, in the days after the bureaus introduced their new score, marked its top two revenue days in the history of the service.

Fair Isaac Statement Concerning Forward-Looking InformationExcept for historical information contained herein, the statements contained in this document that relate to Fair Isaac, including statements regarding its FICO score offering and the benefits to be derived from the offering, are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including issues involving the marketing and distribution arrangements for Fair Isaac’s products, any unforeseen technical difficulties related to the implementation, use and functionality of Fair Isaac’s product offerings, the risks that customers will not perceive material benefits from the offerings, failure of the products to deliver the expected results, the possibility of errors or defects in the offerings, regulatory changes applicable to the use of consumer credit and other data, and other risks described from time to time in Fair Isaac’s SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2005, and quarterly report on Form 10-Q for the period ended December 31, 2005. Forward-looking statements should be considered with caution. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Fair Isaac’s results could differ materially from Fair Isaac’s expectations in these statements. Fair Isaac disclaims any intent or obligation to update these forward-looking statements.

Fair Isaac and FICO are registered trademarks of Fair Isaac Corporation, in the United States and/or in other countries. Other product and company names herein may be the trademarks of their respective owners.

Editor's take on this: Fair Isaac is very worried about this. And further more, I'd say that the Vantage system is an attempt of the Big 3 to break free of the Fair Isaac stranglehold on the credit scoring system. I'm sure the licensing of the credit scoring model developed from Fair Isaac is VERY expensive. I'd say a little competition is a good thing, but who knows how accurate the Vantage scoring system is. What kind of data do the credit reporting agencies have to back up the validity of their models?

Will consumers by hurt by it? Who will use it? Is it an attempt by the big 3 to stop lawsuits from those unfairly damaged by the system currently used by Fair Isaac, over which they have no control? I'd say there are more questions than answers at this point.

ABOUT THE POSTER: Robert Paisola is an international motivational speaker, trainer and author. He is an expert in the field of Personal Real Estate Investor Training. He is a professional speaker who has been featured on CNN, CNNFN, and the Wall Street Journal. He can answer your questions on the "Basics of the Real Estate Investing Business" to detailed issues regarding your specific transactions. Life Experience Robert Paisola is a Professional International Seminar Speaker in the Areas of Real Estate Investing, Tax Lien Investing, Rental Property Management, Real Estate Coach and Mentor Training and Business Management. He has served companies throughout the world. If you are interested in learning the business from someone like Rob email his office at or call our offices Nationwide toll Free at 1-877-517-9555 or visit or visit

Thursday, April 27, 2006

The History of the FICO Score, by Robert Paisola

The History of the FICO Score, by Robert Paisola

In 1956, math whizzes Bill Fair and Earl Isaac left the Stanford Institute to consult with the computer services industry. After creating a billing system for Hilton Hotels, Fair Isaac and Company created a credit evaluation method for a southern lender accused of racial bias. As credit cards emerged, Fair Isaac created a way for card issuers to quickly screen masses of candidates. Banks started using the company's scores, referred as FICO scored, to evaluate their own loans.

In 1995 the nations two biggest purchasers of home mortgages, Fannie Mae and Freddie Mac, announced that they wanted their loans to include a credit score. Fair Isaac designed a credit scoring system for all three bureaus to use and soon after, all loan processing agencies joined in and hence, the FICO score. FICO scores are what the majority of mortgage lenders use to evaluate applicants creditworthiness. The scores are based on complex statistical methods that analyze credit information on nearly every adult in the United States.

In barely 3 years, credit scoring has swept the loan business. Credit scores have existed for 40 years, but were applied to home loans only recently. If you've received a pre-approved credit card application in the mail, it was based on your credit score. High score, high credit line and low rate. Likewise, if a car finance dealership says that would be happy to process a loan on a car, but.... That is credit scoring at work again, except they will need a higher down payment or you need to pay a higher rate. Low credit score, higher down payment, higher rate.

Your ability to get a loan depends on your score. The people affected most are lower income borrowers. Most lenders get reports and scores from the 3 credit reporting bureaus, Experian, Equifax and Trans Union. That is because the credit bureaus rely on creditors to report borrowers' histories, and creditors don't always report to all three bureaus. Hence, the scores can differ. Most lenders will access all three scores and then average them. These numbers, based on past behavior, really predict a persons future likelihood to repay a loan. Studies have shown that regardless of race or income, borrowers with low scores defaulted much more often than people with higher scores.

Your credit report is a list of accounts that banks, merchants, government agencies and courts report that you are responsible for either solely or jointly. Each will show the accounts age, credit limit, current balance, high balance and payment history. All of this information is used in the credit scoring calculation. A credit score, based on the report information, is likened to a camera snapshot that captures your creditworthiness at the moment the score is calculated, so you can see how important it is to make sure that the information is correct and up-to date.

We all have a credit report and whether it is good or bad is something that you need to start thinking about. If you have ever financed a car, or had a loan of any sort, even a credit card you have a credit report. And if you have ever paid bills for anything like a cell phone or for electricity then you have a credit report. It is important that you have a good credit report for several different reasons. First of all if you have plans to buy a house someday or a new car then you are going to need good credit to be approved for financing. Most people do plan to purchase a home someday and you cannot do that unless you have good credit. Your credit rating will even affect the interest rates that you will be able to get your loans at. The lower your interest rate the more money that you will save.

I am sure that you have heard or read the offers that promise you that they will erase all of your bad credit history quickly and efficiently but these promises are false. No one can get rid of your bad credit history but you. Time is the only thing that will heal these types of wounds and anyone that promises you otherwise is lying to you.

A good tool for you to refer to when you are trying to rebuild your credit is the book written by the Federal Trade Commission (FTC). This book will teach you the following: your rights under the Fair Credit Reporting Act and your rights under the Fair and Accurate Credit Transactions Act. It will also teach you how to legally improve your credit, knowing how to do this the right way is important, this book will also teach you about identity theft and how it can affect your life and most importantly it will teach you how to deal with your debt once and for all.

The Fair Credit and Reporting Act is dedicated to making sure that your records are keep accurate, private and safe. It is the FTC that enforces the rules and laws as they pertain to the credit reporting companies. You have many rights that you probably do not have any idea what these rights are. One of your most important rights is the right to see your credit report. You have the right to a free copy once a year but you will have to request it, it will not be automatically sent to you. When you get your report you will also get a list of the companies and people who have also requested a copy of the report.

Most people wonder what exactly is on their credit report. Your credit report contains your name and address, birth date and Social Security Number as well as your employment history and your spouse's name. You will also find your home ownership, income, and previous address information. Some of these things may only be given to those who specifically ask for this information.

Your credit report will also have exact record of all your past history as far as the amount of credit that has been extended to you as well as how you dealt with this credit. If you have not paid your debts off according to schedule then this will be noted on the report. Every company, person or business that has ever requested a copy of your credit report over the last year, regardless of their purposes will be noted on your report as well. And if you have ever been the subject of a foreclosure or you have filed for bankruptcy or even if you have tax liens this information will be on this credit report.

You are permitted to receive one copy from each of the credit reporting agencies at no charge each and every year. It is a good idea to get your report from each company because they may have different information on them. All you have to do is ask for a copy and they will send it to you right away. In order to get your free credit report all you need to do is visit and there you will be directed to the different credit reporting companies. The information that you will want to have ready to provide is your name, address, Social Security number, and date of birth. Keep in mind that is the only place that is authorized online to provide you with your credit report. By getting your report from this site you know that you are not taking part in a scam that will end up costing you money in the long run. There is only one other time that you are eligible to receive a free credit report and that is when a company takes action against you. If some company denies you credit you have a right to see your credit report in order to figure out what the problem was and fix it.

Your credit report has a credit score on it and this score is what will determine whether or not you get approved for a loan or more credit. This score is also what will determine what your interest rate will be when and if you do get approved for any kind of credit.
It is the responsibility by law of the credit reporting agency to correct and false or inaccurate information on your credit report. If you ever see anything that you are unsure about on your report be sure to report it immediately. You should first give your credit card company a telephone call and then follow up with a letter explaining the problem. If you have any documentation pertaining to your claim be sire to attach copies to send along as well. Never send the originals, those you need to hold on to. Ask the company to correct these errors as soon as possible. When they respond to you be sure to file these responses away someplace where you will be bale to find them again with ease if you need to. They should respond to your claim within 30 days of the receipt of the letter that you sent so mark down this day.

Once the error has been corrected you have the right to ask that your corrected credit report be sent to all those who have requested it in the last 6 months.

If you credit report is in terrible condition not because of any errors on your report but because of your unreliability with credit then you need to take some steps to deal with your credit. One of the easiest ways that you can take control of your credit trouble is by budgeting. You can plan your budget any way that you want although it is a good idea to not make your budget too strict right off the bat. This could lead to you abandoning it altogether. A good way to plan your budget is to first keep track of all your expenditures. Write everything down and then at the end of the month take stock. This list will give you a good idea of where you can cut down and what you can cut out.

If your biggest problem is coming up with enough money to pay your credit card bills then you should consider giving your creditors a call. It is far better to let them know about the problem than it is to simply not pay them at all. They may be willing to work out a better payment schedule for you. This might even keep them from raising your interest rate.

If you are past the point where your creditors want to deal with you and you have already been passed off to debt collectors you need to know your rights. Legally debt collectors cannot call you before 8 am or after 9 pm, nor can they call you at work unless you have previously given them permission. And if you feel you are being harassed by debt collectors all you have to do is send them a written request to stop contacting you and they must honor this request.

One of the options that you have is debt consolidation. Debt consolidation is a good option for those who are looking for lower monthly payments. This not too bad of an idea because at least this way you will be able to make your payments without further damaging your credit. The one thing to keep in mind is that when you consolidate your debt it will be taking you longer to pay them off. The longer it takes you to pay off the loan the more you will end up paying in interest. You can use lines of credit to consolidate your loan but if you do this you will most likely be asked to put up your home as collateral. If you default on these payments then you will lose your house.

One of the most important things for you to learn is that you are in a prime position to be taken advantage of. Millions of people just like you get fleeced each year by falling for scams that promise to fix your bad credit or erase it entirely. None of these promises are worth as much as the paper they are printed on because there is nothing that can be done to simply erase bad credit. All you can do is work to improve your credit and depending on how bad your credit is this could take some time. Make sure that you look into any company that you are considering working with. A good place to find information is your local better business bureau.

Many of the credit scams that are out there can actually land you in hot water with the law. Some of these companies will charge you money up front and then they will proceed to teach you how to erase your debt history. In fact you are not erasing anything, only creating a new credit identity, which is illegal and punishable by jail time.

Your credit report can be damaged by others besides you and knowing this and how to prevent it is important to your financial welfare. Identity theft is getting to be more anymore prevalent all of the time. It does not take much for someone to be able to steal your entire identity. All they need to do is get a hold of some of your personal information. Some of the most common ways that others steal your identity are by stealing information about you that they come across on the job or by talking someone else on the job to give them your information. This can happen by them paying off an employee or perhaps they already have a previous relationship with an employee that they can use to get such personal information. Hacking into computer records in order to steal personal information is also very common. In this day of computers and technology anyone can learn how to hack into just about any company or network.

Going through others trash is another one of the more common techniques that identity thieves use to gain access to your personal information. We are always getting offers in the mail, many of them pre approved and all it takes is for someone to get a hold of one of these little pieces of paper and they can take over your life. They can then go on to destroy your credit rating and history. You should always shred any and all of these offers that you receive in the mail to avoid identity theft.

Another way to avoid identity theft is for you to keep your credit cards in a separate place from your wallet. This way if a thieve steals you wallet all they are getting is your cash. While it is never fun to have your cash stole at least this will not destroy your entire life. Losing your credit cards to an identity thief can destroy your life. Your credit report is accessed by employers and even landlords these days and if your credit report is in really bad shape you could find yourself without a place to work or a place to live. This is why you should never write down your credit card numbers or your bank account numbers where someone could find them and why you should get a copy of your credit report each year.

If you think that your identity may have been stolen there are some things that you can do. Putting a fraud alert on your credit cards is a good idea and it can save your credit rating. All you have to do is call the credit reporting companies and let them know that you would like to get a fraud alert on your credit report. Getting copies of your credit report from all of the major credit reporting companies will help you to see if there has been any fraudulent activity. The next step is for you to contact your local police station. Let them know what has happened to you including all detail about how it could have happened. You will then want to contact the FTC and fill tem in on what has happened to you as well.

About the Author:

Robert Paisola is an international motivational speaker, trainer and author. He is an expert in the field of Personal Real Estate Investor Training. He is a professional speaker who has been featured on CNN, CNNFN, and the Wall Street Journal.

He can answer your questions on the "Basics of the Real Estate Investing Business" to detailed issues regarding your specific transactions. Life Experience Robert Paisola is a Professional International Seminar Speaker in the Areas of Real Estate Investing, Tax Lien Investing, Rental Property Management, Real Estate Coach and Mentor Training and Business Management. He has served companies throughout the world.

If you are interested in learning the business from someone like Rob email his office at or call our offices Nationwide toll Free 1-877-517-9555 or visit Source:

Sunday, April 23, 2006

New credit scores supposed to help lenders facilitate loan pricing

Just when you thought that you were beyond the problem of needing to achieve higher letter grades for your “permanent” record, here they come again! Yes, now you will have the pleasure of being “letter graded” from cradle to grave.

A new credit scoring system is being introduced that reduces the previous FICO number to an alternative letter grade (A, B, C, D, F) — or VantageScore(SM). In a time when interest rates seem to have an upward trend, the higher our credit score (no matter which method is used), the more justification we have to argue for lower interest rates and higher loan amounts from lenders. This article discusses the new system and how it relates to the more-established FICO score.

The goal of all credit scores is actually to facilitate loan pricing and securitization for lenders that do not retain credit exposure on their loans. Defaults on loans create losses that are spread across all loans, so we all benefit from low default rates. Those with poor credit do not usually qualify for much credit and the interest rate they pay is usually higher than the rate paid by those with top credit ratings. Many studies exist showing a high degree of correlation between default rates and credit scores. This is not always true in individual cases because some borrowers are better at negotiating both loan amounts and interest rates with various lenders.
The three major credit bureaus (Equifax, Experian and Trans Union) currently emphasize the Fair Isaac Corporations FICO score to establish our credit status. If you have used these agencies, you have probably noticed that they do not produce the same score/number.
The key FICO factors are: (1) Payment History — about 35 percent, (2) Amounts you owe — about 30 percent, (3) Time you have had an established credit history — about 15 percent, (4) Types of credit you have used — about 10 percent and (5) History of attempts to establish additional credit — about 10 percent.

Note that the score calculation only considers items on your credit report whereas lenders look at other factors such as employment history, level of income and type of credit you are seeking. Everyone should keep informed about their credit reports and seek to remove incorrect information as soon as possible. Improvements in FICO scores can be achieved over time by (1) avoiding late payments/collections activities, (2) reducing credit card balances (canceling them can have a negative impact), (3) avoiding too many applications for credit while maintaining sufficient credit for your needs.

FICO scores range between about 300 and 900. The median FICO score is around 720; scores above 725 are considered “good” while scores below 600 are considered “bad.” In theory, the higher the number, the greater the amount of credit you can obtain and the lower the interest rate. Report any credit report errors to all three credit agencies: U.S., Equifax (1-800-685-1111), Trans Union (1-800-916-8800) and Experian (1-888-397-3742). These agencies have procedures in place to help you maintain an accurate report.

Note that in the list of key factors, your credit history and the amount of time credit has been established play a significant part (approximately 50 percent) in the calculation of the FICO score and employment history is a part of the lender’s decision. What if you are essentially “new” to the work force and you have not established a credit/payment history? One criticism of the FICO score is that it does not provide for those that are beginning the long road of credit management. It is anticipated that the new VantageScore system will provide more support for those in this situation.

Introduced in March jointly by the top three credit rating agencies (patent pending), VantageScore(SM) is not expected to have an immediate impact on credit decisions. In time it will become the first rating system that applies consistent analysis across all three companies. This will reduce differences in ratings between agencies to differences in data files rather than model interpretations of data. Since it was developed using the credit histories of approximately 15 million consumers, it provides for those that are new to obtaining/managing debt, improving the chances of obtaining debt at lower costs. Letter grades for the VantageScore system are produced as follows: A901-900, B801-900, C701-800, D601-700 and F501-600.

As we manage the quantity and cost of debt over time, this new system will probably become another factor used by lenders.

Saturday, April 22, 2006

Consumer Advocates Have Mixed Reaction to New Credit Scoring System

Consumer Advocates Have Mixed Reaction to New Credit Scoring System

By Lydia Verret, Reporter

VantageScore(sm), a new credit scoring system, was recently jointly introduced by the three leading consumer credit reporting companies, Equifax, Experian and TransUnion. VantageScore is designed to simplify and improve the credit process for consumers and creditors with a more consistent and objective approach to credit scoring.

According to proponents, this new scoring model is supposed to utilize patent-pending analytic techniques to compare the differences in the three credit files (from the three major credit reporting companies) to provide consumers and businesses with a highly predictive and consistent score, which will be easy to understand and apply.

Consumers and creditors will recognize the following score groupings in VantageScore’s new credit scoring scale:• 901-990 A• 801-900 B• 701-800 C• 601-700 D• 501-600 FReaction from many consumer advocates has been mixed. Scott Bilker, author of Talk Your Way Out of Credit Card Debt! notes:

“Clearly, this is a new way for the credit bureaus to make more money selling information about us. Selling it to lenders, insurance companies, and to consumers. Of course, that information could help us, or hurt us, depending on how and why it's used. The good news for creditors is that it easier to have a single score instead of analyzing different scores.”

Time will tell if the new VantageScore system will replace the popular FICO credit scoring model that has been around for many years. According to Gerri Detweiler, a noted consumer educator and author of The Ultimate Credit Handbook:

“VantageScore(sm) is competition to FICO scores, but lenders tend to be somewhat slow to adopt new scores. In addition, I don’t expect the mortgage industry to quickly replace FICO scores with VantageScores. Competition, in an of itself, may not be a bad thing here."

VantageScore is now commercially available. It is being marketed separately by Equifax, Experian and TransUnion through licensing agreements. We welcome your comments about credit card and money issues in our popular credit forum!

Lydia Verret has been a reporter for for approximately a year, but has had a passion for writing for many years. Her writing career begin in high school as roving reporter for her school newspaper and yearbook. She is a proud mother of two daughters, one of which currently writes for her school paper, and resides in Memphis, TN. She also is proud to married to a firefighter who is quite the handyman. is the most comprehensive source for comparing credit card offers. is pleased to offer consumers free credit card ratings.

Tuesday, April 18, 2006

Credit scores: Where confusion abounds

Just when we get used to the idea of credit scores and each credit bureau having its own version, here comes yet another version. But first, let's review:

In the beginning, there was Fair Isaac, the firm that invented a mathematical formula that creates an individual's three-digit FICO score, which supposedly measures how much debt a consumer is carrying and how well the consumer keeps up with bills. The higher the score, the better risk that person represents.

Experian, Equifax and TransUnion are private companies that track individuals' credit accounts and payment habits. Not wanting to be left out of the lucrative credit-scoring business, each created its own brand of credit score, licensed the FICO scoring model to create its individual "brand" and made the scores just different enough to become very confusing. One bureau's scores can go as high as 900, while another tops out at 820. That means a score of 780 could be marvelous with one agency but rather average with another.

Several weeks ago, the credit bureaus announced they are banding together to come up with an all-new, uniform credit score called VantageScore. The reasoning is, this new VantageScore will be easier for consumers to understand and will make things more consistent for lenders. Of course, they refer to the "confusion that abounds" in credit scoring as their motive. I don't buy it for a moment. I see the bureaus creating a new income stream because, without a doubt, this is a new product for which they will charge dearly.

In its announcement, Experian said the new VantageScores will be grouped on "the familiar academic scale."

A - 901-990
B - 801-900
C - 701-800
D - 601-700
F - 501-600

Of course, there will be a hefty charge to get one's VantageScore, and I'll wager it will be more than a onetime event. They will want to sign us up for monthly credit-score monitoring or some such thing.

While I cannot comment further on the VantageScore until I see it, I can advise that unless you are planning to apply for a mortgage or other secured financing within the next couple of months, don't worry about your credit score. You don't need to know what it is. Instead, keep your eye on your credit report - free once a year from each of the big-three credit bureaus. Go to to get your free reports, and make sure only correct information is reflected in them. Then pay your bills on time. All of your bills, all of the time.
On the rare occasion you need to check your credit score (in anticipation of applying for a mortgage would be a good reason to check it), go to This is the score that most lenders look to and the one most widely respected.

Take care of your financial affairs in a responsible manner, and your credit score will take care of itself.

Saturday, April 15, 2006

Change adds to credit score confusion


One thing that definitely befuddles many consumers is the credit-scoring system.

And things got a little more confusing when the three major credit bureaus -- Equifax, TransUnion and Experian -- recently announced they had joined together and created their own branded creditscoring model, which they hope will replace FICO, the one now widely used by lenders.

Right after the announcement, my e-mail in box began filling up with questions from readers about credit scoring.

The FICO credit-scoring system, developed by Fair Isaac Corp., rates consumers on a scale of 300 to 850. The VantageScore system created by the credit bureaus uses a scale that ranges from 501 to 990. The bureaus' version is supposed to approximate a letter-grade system. Scores of 901 to 990 would be the equivalent of an A; 801 to 900 a B; 701 to 800 a C; 601 to 700 a D; and 501 to 600 an F.

"It appears now that someone with a credit score of, say, 800 under the current system, certainly top of the line, since 850 is the current ceiling, would move from a top rating to average under the new system," one reader wrote.

That's an incorrect conclusion. The two systems are not being merged. High scores under the FICO model remain high. It is more likely that if you have credit scores in the 800s under FICO, you'll score in the 900s in the VantageScore system, assuming the bureaus use the same or similar factors to determine people's credit worthiness.

The announcement about VantageScore also gave folks a chance to vent about errors in their credit files.

"Suppose a credit bureau reports information that is incorrect. Why wouldn't this be legally actionable? Why can't I sue?"

Actually you can. Under the federal Fair Credit Reporting Act, the credit bureaus and businesses that supply them with data are obligated to correct inaccurate information. The act is supposed to ensure the accuracy of information contained in your credit files maintained by the credit bureaus.Correcting errors on your credit report can be maddening.

The problem is that in trying to verify information, the bureaus simply go back to the source. And guess what the creditors often do? They simply confirm the incorrect information in their databases.

If you find an error in any of your credit reports, the Federal Trade Commission says you should write to each agency requesting a deletion or correction. Your letter should clearly identify each item in your report that you dispute. You should also enclose a copy of your report with the items in question circled. Include copies (not originals) of documents that support your position. And finally, send your letter by certified mail, return receipt requested, so you can prove that the credit bureau received the information. Also, keep records of everything and everyone with whom you talk.

But before you do all that, contact the creditor that supplied the incorrect data. You have to attack the erroneous information at the source. If you can clear it up with your creditor first, you have a better chance that the error won't be transmitted again.

The law requires credit agencies to investigate disputed information and correct inaccuracies within 30 days of hearing from a consumer.

If you don't get satisfactory action from the credit bureau or creditor, you have at least two recourses. You can complain to the FTC. Unfortunately, the commission doesn't get involved in resolving individual consumer problems. However, your complaint might lead to some law enforcement action.

Your second option is to file a lawsuit. You can sue in state or federal court. In some cases, you may have more rights under state law. For more information, contact your state or local consumer protection agency or your state attorney general's office.

These types of cases are not easy to win but if you have a particularly egregious situation, go for it. To find a lawyer, try the National Association of Consumer Advocates. Their Web site,, lists consumer lawyers by state.

Finally, those of you with great credit scores -- 720 or higher -- stop obsessing. You don't need a perfect score to get the best credit offers.

Whatever credit-scoring systems lenders use, continue to question what you don't understand. After all, your scores directly translate into real dollars.


Robert Paisola is driven by a passion for people motivating them to reach their top potential and has been the director of Many International Corporations, Robert trains sales and marketing professionals who want to strive to get to the top...and stay there.

His innovative, no-nonsense approach is based on applying what he has observedin his fifteen-plus years in sales, motivational speaking andtraining,thus revealing the common business habits of the top 20% of salesperformers in all organizations.Robert's approach works...that's why New York-based Success Magazine has rated Robert Paisola as one of the top-five most effective sales-training professional in the market today. Routinely Distinguished by The NationalSpeakers Forum, Robert is also a regular contributor to Business Week Magazine, CNN, CNNFN, XM Satellite Radio, The Wall Street Journal,Telemundo International, National Public Radio and many other organizations. For more information on Robert Paisola’s unique training programs, contact Robert at Western Capital at or at 1-877-517-9555 or visit Robert's Media Access site located at:

Wednesday, April 12, 2006

Robert Paisola, owner of issues Release

We Can Guarantee that you have NEVER Experienced this type of Program in your life! On-Site Crisis Management Like You Have Never Seen Before! LISTEN TO THE LIVE CALLS AT THE END OF THE PAGE!

You will need to visit to see the site and listen to the calls.!

Updated 4-10-2006

Western Capital has pioneered methods that enable debtors to satisfy creditors while retaining the cash flow necessary to stay in business and recover.Western Capital and it's CEO, Robert Paisola hahave helped thousands of businesses get out of debt and sends millions of dollars to creditors annually. Western Capital bridges the financial gap between struggling businesses and their creditors.By developing affordable payment plans and negotiating acceptable terms with creditors, Western Capital provides its clients with the best chance of survival. This also gives creditors the best chance of being paid. Our program works because it is fair to all parties involved.Some highlights of our company are as follows:

We have consistently provided creditors with the best attainable payment options given the debtor's ability to pay.

Our employees are all veterans of the debt collection and debt restructuring industries.
They have successfully settled over 10,000 debts on behalf of debtors and creditors alike.
Our CEO, Robert Paisola, is an Expert in the areas of Debt Collection and Business Credit Collections, So, who better than another collector to battle YOUR CREDITORS!
What We Do to create a Win-Win with your Creditors

With the help many experienced credit professionals, we have developed a unique and systematic method for satisfying creditors with affordable installments that you determine. Our On Site Program will deeply analyze each client's financial condition in order to structure the best available program that not only meets your needs, but also the needs of your creditors.Our strategies for securing assets (CALLED ASSET PROTECTION) will often deter creditors and their pit-bull attorneys from proceeding with additional collection activities and will increase the motivation to settle. No longer will aggressive creditors have the ability to exhaust a debtor's resources. And we will free up your staff's time of answering calls that are impairing your ability to make money.

The collection Calls go to us! Call 1-877-517-9555 and act like a pissed off collector, and see what happens! Yes, you too can have that service!Since this is a very unique service and getting out from under the mess that has been created over time, We highly recommend that Robert Paisola spend at least one week at your location. He will work with your people and review all of the facts and figures to come up with a "game plan". It will require the full attention of the CEO and the entire management team to make this happen, but one thing we can tell you is that we understand how is to be the day before payroll and be 30K short.

Many people believe that the methods that we use to protect you and your company are aggressive.... Well they are!

We are paid to PROTECT YOU and YOUR COMPANY! And believe us when we say that we have seen it all. The good news is that we rarely deal with your attorneys. They get paid to CHURN DOCUMENTS. We do not play the game that way. Call Robert and he will explain how it all works. The collectors who are after you and causing you to have sleepless nights will regret the day they met us.

Just think about this... Who else can possibly be better at dealing with creditors and collection attorneys and agencies, than another collector. That is where the game ends. That is where your stress ends.

We also understand the importance of keeping your important supply lines open with certain priority creditors. If a debtor includes creditors that are vital to the business, we will make every effort to ensure that an ongoing relationship is part of the settlement. Basically this is the "communication side" of the workout. That will be done at your offices most of the time.When we are finished working with you, You will have no question as to the amount of money Your Company needs weekly to stay afloat, because the monthly cash requirement is predetermined based on our analysis of your companies financial condition. By converting short-term debt into manageable long-term payouts, we can increase your immediate cash flow NOW!


Our goal at Western Capital is to develop a plan that you can afford and creditors will accept. The program works as follows:

Call us IMMEDIATELY and ask for Robert Paisola (especially if there are IRS GARNISHMENT ISSUES or LAWSUITS)

Fax us a list of your problem creditors to 408-889-2415, we will run a preliminary analysis on the problem.

We will then look at your cash flow and see if it financially makes sense to have Robert come to your business,

We agree on a fixed price for the onsite visit, The price varies based on where you are located. For instance if you are in Detroit, the price will be different than if you are in Miami or Dallas. Its all about the convenience and destination of where you are located.

You use your built up stash of miles to fly Rob to your location and set up the hotel and "activities"

The CEO and President or Owner will meet in the lounge at the hotel and have a brainstorming session and you will lay out the confidential facts of your issues. EVERYTHING is COMPLETELY CONFIDENTIAL!

Voila, the next day, Robert Paisola shows up at your office and all hell breaks loose! So if you have employees who are not used to an ADHD Type A Personality,,, You might want to prepare them.

We will review all of the files and invade the Accounts Payable Office. We will devour the box of unopened mail that is sitting in the corner because it is all bills and you did not want to have to deal with it.

Next, we will start calling the SECURED creditors who you are PERSONALLY LIABLE for payment on. We will make this the top priority (along with payroll)

We will all go to lunch daily and we will discuss the project with your team. Some people will be PISSED. Some will be AMAZED. So, be prepared!

Unsecured creditors are always the last priority and we straight out tell them that, You can not conceive the POWER that you have when we are at your location and your creditors are folding like ducks in the water.

Next comes the PLAN, that is where we will set you up with a cash allocation analysis. You will be required to create the BUY IN from your employees so that they can see that things are changing, Rob will give you direct feedback on who is the dead weight in the company. Lets hope it is not your wife, but he will tell it like it is!

By the time the 4 days are over, you will no longer require Valium or Lortab just to Function. You will have a plan of attack and you will have a number to give all the creditors. That is what we get paid to deal with. You simply say "I am so sorry Jennifer, I know we owe you 110,000 on that invoice, but all of our finances are being CONTROLLED by a company called Western Capital. Give them a call.... And have a nice day!

Once Robert arrives back in Salt Lake City, Utah his team will devour your data and you will have direct access to Rob at a reduced rate, unless you become a pain in the ass, and then the fee doubles.

Bottom Line... You have no choice. If you have read this far, You need our help and we GUARANTEE that NOBODY ELSE will play the game the way we do. That is why Robert Paisola is an international Expert in Credit and Collections, just look at and

So, just do what comes natural and call Rob Today at 1-877-517-9555 and if the staff plays games with you on getting through to him, tell them to patch you through because you are a CLASS 120 CASE


Now, Try and find someone who will do that!

(These are unedited calls, you may want to wait for the call to start or right click and save)

LISTEN TO CALL NUMBER ONE The Car Deal From Hell Part 1
LISTEN TO CALL NUMBER TWO The Car Deal From Hell Part 2


Now print this out and have your legal department read this! Just watch their Faces! Call Rob at 1-877-517-9555 NOW and also email with your information at

Thursday, April 06, 2006

The Vantage Score Development Timeline

Secret VantageScore - "The New Standard in Credit Risk Scoring"

The scale is 501 to 990. In the Robert Parker wine scale, you get 50 just for showing up.

The official FAQ

Apparently, "How can I get my score?" is not asked frequently.

That's probably because-- with our prior experince-- we already know their response: Go away, you can't have your score.

Terry Savage, Chicago Sun-Times: "Equifax says it'll wait until lenders accept this new score before marketing it to consumers. That's expected to take at least six months."

Caroline Mayer, Washington Post: It doesn't predict anything until lenders say so.
"The new scoring system will not be valuable to consumers 'unless the credit grantor adopts and uses it,' said Paul J. Springman, chief marketing officer for Equifax. He said his firm would switch as soon as lenders accept the new system. 'That will take more than six months,' he said."

Internet domain domain was registered by "Trans Union LLC" on January 30.
Two-year commitment: expires 2008 (by contrast, and are registered through 2012).

Corporation: "VANTAGESCORE SOLUTIONS, LLC" was incorporated in the state of Delaware exactly one month before the official announcement of the company's existance. File number 4109899.

Who's who

TransUnion: "Chet D. Wiermanski is vice president of TransUnion’s Analytic Decision Services group responsible for identifying, evaluating and developing new business opportunities involving predictive modeling and related consulting services."

A virtual company; no physical address on its web site, no president.

Press releases

Joint release; dateline in alphabetical order

"VantageScore(SM) To Set New Standard For The Marketplace - TransUnion Says - New Score to Fill Void of Consistency and Choice in the Industry"


Joint release

It's another secret forula, so you'll just have to take their word for it, again. "No other model does a better job of delivering objective and consistent credit scoring."


Joint release

"Experian launches new credit scoring system, VantageScoreSM" - "The new scoring system addresses the potential weaknesses in existing scoring solutions in the marketplace because any variances in credit scores between credit reporting companies will be attributed to data differences within each of the three consumer credit files and not to the structure of the scoring model or interpretation of the data."

The Wizard speaks

Kathy M. Kristof, Los Angeles Times

"Ron Totaro, vice president and general manager of global scoring solutions at Fair Isaac, said the credit-reporting companies 'have all had their own credit scores that they have tried to sell against us, and they've been wildly unsuccessful. This is them trying to take another crack at our fortress.'"

Eileen Alt Powell, Associated Press: "'Do the customers . . . really want to go through the pain of converting to another system?' [Fair Isaac's] Grudnowski asked. 'I think only time will tell.'"
Jean Chatzky: "Stephen Brobeck, executive director of the Consumer Federation of America, said the new score will create problems... 'It's a terrible idea.'"

Matthai Chakko Kuruvila, San Jose Mercury News: "The changes in credit scoring underscore the intimate way credit lives with consumers as a measure of self-worth."
GIGO, Businessweek Online, Peter Coy

"... VantageScore can't overcome the problem of incomplete or inaccurate information. "Garbage in, garbage out," says Greg Fisher of Dayton, Ohio, who runs two web sites on the subject, and"

Christopher Conkey, The Wall Street Journal:

"Atlanta-based Equifax says annual revenues for its "personal solutions" division, which sells consumers credit scores (used by lenders to assess risk and set interest rates), reports and monitoring services, jumped by more than 60 percent to $115 million over the last two years, outpacing the 19 percent rise in its $800-million-a-year division that sells credit information and risk-assessment tools to businesses."


No Credit Except for the Hype

No Credit Except for the Hype


We, as consumers, have always had three different credit scores to present to people who may lend us money or a line of credit. That's because there are three consumer credit rating agencies.

Those three agencies have recently unveiled a new unified scoring system designed to bring consistency to the process of borrowing and lending.

This is supposed to be a good thing and they keep telling us it is, but they won't tell us why. Unfortunately, the bureaus won't disclose how the new system calculates scores so we're stuck with only their hype.

Your credit score is a number designed to give banks an idea of how risky it is to lend you money. The score is based on your credit history: whether you've made a lot of late payments or routinely max out your credit cards. Or, on the positive side, maybe you've never missed a payment and only use credit cards for things you could pay for in cash.

Sponsored By

The new VantageScore will compete with the long-revered FICO score by Fair Isaac Corp., though, again, we have no idea how the scores compare because the bureaus won't release their algorithm. VantageScore pairs score ranges from 501 to 990 and the familiar academic scale of A to F, presumably to make things really simple for consumers.

-- 901-990 equals an A
-- 801-900 equals a B
-- 701-800 equals a C
-- 601-700 equals a D
-- 501-600 equals an F

So when you're kid comes home and says, 'I've got an A' in home economics you can say, 'Me Too' -- hopefully.

Maxine Sweet, vice president of public education for Experian, said in a press release that credit scoring is the hottest topic among consumers seeking credit education materials. A unified scoring system means consumers can get a clear picture of their credit worthiness instead of having three different scores.

There's a big but here: the main reason one person can have three completely different scores under FICO is because not all creditors report payment history and account information to every bureau. So while Experian might know that you're 60 days late on a car payment, TransUnion may not.

VantageScore does nothing to improve this problem and it doesn't appear that the credit bureaus are focused on the issue of data inaccuracy. So you could still have three different credit scores. Where's the advantage?

The scorers say that consumers can rest assured that the three companies have judged their credit differently not because of the fact that they are different companies that use different scoring formulas but because they receive different information about the person involved. According to a joint press release from the bureaus, scoring differences can no longer be blamed on them but will be attributed exclusively to these data differences.

What they actually said was: "The new scoring system addresses the potential weaknesses in existing scoring solutions in the marketplace because any variances in credit scores between credit reporting companies will be attributed to data differences within each of the three consumer credit files and not to the structure of the scoring model or interpretation of the data."

Isn't that what I just said in English?

If they really wanted to do consumers a service, why not spend some time and resources to ensure that the information they receive about someone is accurate?

Not going to happen. Steven Katz, director for consumer communications at TransUnion, told me consumers must review their credit files and contact creditors regarding inaccuracies. And he said it wasn't a problem: He pointed to a 2004 study by the Federal Reserve Board that found inaccuracies in a credit file don't necessarily affect an individual's ability to obtain credit.

But with predatory lenders willing to offer credit to just about anyone these days, the question isn't so much about whether credit will be granted, but at what rate. That's why it's important for the score to be reflective of accurate information. If you have three different scores, mortgage lenders, for example, generally go with the middle one.

The new scoring system may be the best thing to ever happen to credit scores, but without information we're left with hype. What we do know is that the bureaus got together, agreed on a common system and gave it a marketable name. VantageScore certainly sounds like something that might give you an advantage.

The score is a pretty big deal because the higher it is, the less you pay for the privilege of accessing lines of credit regardless of whether you're buying a home or a cell phone. For example, a person with a credit score between 760 and 850 -- the highest under the FICO system -- will pay $319 less per month for a $216,000 30-year-fixed rate mortgage than a person with FICO scores below 620. That's nearly $4,000 a year just because you never pay your bills late. Fair Issac Corp.'s calculations were based on the best interest rates available at press time.

And it doesn't matter how much money you make or what kind of job you have. Just pay your bills on time and your score will rise. There are a few other factors, but payment history counts for 35 percent under FICO. How much debt you have counts for 30 percent, length of credit history counts for 15 percent of your score. New credit such as the number of recently opened accounts and credit inquiries account for 10 percent of the score. The type of credit accounts for another 10 percent.

Regardless of the system, there are some surefire ways to raise your score:

-- Keep balances low on credit cards
-- Pay off debt rather than moving it around
-- Don't close unused credit cards as a short-term strategy to raise your score it may raise your debt-to-income ratio
-- Don't open a number of new credit cards that you don't need just to increase score - this approach could backfire
-- Don't open a lot of new accounts in a short time
-- Closing an account won't make it go away.
-- Go rate shopping for a loan within a set period of time. FICO scores consider multiple inquiries for a car loan, for example, as a single entry as long as they're within a certain time period.
-- Checking your own credit won't affect your score so check your credit report at least once a year and correct errors.
-- Pay your bills on time, always (this can't be overemphasized so if you're forgetful, set up automatic bill payments or make a date with yourself to pay bills online. It only takes a few minutes and will save you lots of money.