@Thomas_Thumb wrote:I remain confused. Let's keep it simple. One poster up thread thought you went from 3 cards reporting balances to 5 cards reporting balances. Is that true? If not what was the before/after count with balances? Information on credit limits and balances not Germaine to this question.
Fico does indeed have a metric for"number of accounts with balances". This is numerical and not specific to credit cards. Fico also looks at % of cards with balances. Both of the above metrics may have multiple thresholds.
I have found Experian to be least sensitive to # of accounts with balances and % of cards with balances. Impact of these metrics on score is dependent on presence of an open loan, AoOA, file thickness and whether AoYRA is under 12 months.
End of the day, I don't consider the OP's point drop as significant. It is certainly not exhibit A in arguing value of Fico credit scoring algorithms. This tool is for use by lenders and they vote with their pocketbooks.
Many posters here whine about or trash VantageScore. I think it is great to have alternate credit scores. Without competition what is the incentive for Fico to continually improve its products? Litigation and legislation does not drive continuous improvement, competition does.
You sum up well what drives my curiosity into scoring and why we often are tilting windmills when we complain about unfairness in our scores. The algorithms are proprietary and like a nesting doll mated with a rubiks cube. So many factors embedded in the code, which have an exponential impact when one begins to understand bucketing and different scorecards for aging, dirty, clean, etc. Isolating a single change in a normal person's credit profile is nearly impossible because we use our credit every day, multiple times. Even when we aren't using credit for a short period of time and we believe nothing is changing, it is changing because it's aging, an account fell off, a CLI, etc. As you point out, we are not the reason that the algos do what they do, the lenders foot that bill to FICO.
I admit to being in the camp that Vantage 3 scores are useless because they are never used in a creditor decision. I agree that competition is good and drives improvement. However, my biggest problem is how VS3 is delivered to the consumer. Most people get their VS3 scores via sites like CK and they are just simply not being given good credit advice. "Good approval odds", "Help your score by adding another card", etc. The statements are just simply not true and they are just looking to generate ad, click, and app revenue. One could make a valid argument that VS was born to generate this revenue to offset the cost of paying FICO for their scores, which are actually used in lending decisions.
@Thomas_Thumb wrote:Actually, the 3 CRAs own VS. They wanted to avoid paying the exorbitant fees charged by FICO to generate credit scores. Long term strategy has been to offer a mainstream lender accepted alternative credit score. VS3 has been used by rental companies and as an initial screen by marketers of credit cards to cull the herd. With VS4 it appears VantageScore may finally be gaining a mainstream foothold in installment loan decisioning.
2025 will be a make or break year for acceptance of VS for use in mortgage loan decisioning.
@Thomas_Thumb Apologies if I was unclear, but I was commenting on why the CRAs invented VS. I thought it was well known that they developed the scoring algo to compete with FICO. What I am questioning is how it is being delivered to the consumer and the revenue generation around offering bad credit advice under the guise of "helping" us. It's disingenous when Credit Karma (or any site using VS3) gives "approval odds" and then gives a prediction that getting this card "will help your score". The problem with approval odds and predicting score impact is that currently the VS3 score won't be used in the lending decision and the score impact is both questionable for VS3 and most importantly could have the opposite effect on your FICO score, which will be used in lending decisions. You won't find this clearly stated anywhere that a VS3 score is given and they just want to generate clicks and new applications. For most consumers they are getting terrible credit advice based on a VS3 score.
There are other examples of this like Experian "credit boost", which is additiional disingenous advice because it's a score change that won't be used in a lending decision. The bottom line is that the CRAs are for profit and do not have our best interest in mind, we should not forget that.
I'm not up on the latest news, so not sure if the GSEs are seriously considering VS for lending risk. I don't think anyone would argue how archaic FICO 5/4/2 is at this point. I'm sure that the CRAs have a lobby and I'm sure FICO has something to say about it. Will be interesting to see what happens for mortgages.