Fair Isaac loses legal fight over rival credit-scoring system

[BobWang]

http://www.startribune.com/lifestyle/yourm...iD3aPc:_Yyc:aUU

A Minneapolis jury dealt Fair Isaac Corp. a blow today when it ruled in favor of the company's credit-scoring competitors, VantageScore, Experian and TransUnion, in a three-year-old lawsuit brought by Fair Isaac. The Minneapolis-based credit-scoring company accused the firms of trademark infringement for also using a three-digit credit score model, as well as unfair competition.

 

Fair Isaac, which goes by the name FICO, said it plans to appeal the verdict.

[GEORGE]

[breeze]

They'll appeal it.

[GEORGE]

They'll appeal it.

SO...

 

It is not like most here are going to ROOT FOR ONE SIDE or THE OTHER

[GEORGE]

WIN or LOSE ON APPEAL...what does the consumer get out of this

 

[breeze]

They're not doing it for us.

[GEORGE]

They're not doing it for us.

FIGHT TO THE DEATH

 

[azntg]

They're not doing it for us.

FIGHT TO THE DEATH

 

 

Makes it more fun for us to watch

[radi8]

Win or lose, you can bet there'll be a little "modification" to FICO scoring soon:

Create competitive scoring model, lose 250 points.

[Uncle Leo]

Personally, I find the claims specious, so I'm glad they lost.

[clutchcargo]

http://www.startribune.com/lifestyle/yourm...iD3aPc:_Yyc:aUU

A Minneapolis jury dealt Fair Isaac Corp. a blow today when it ruled in favor of the company's credit-scoring competitors, VantageScore, Experian and TransUnion, in a three-year-old lawsuit brought by Fair Isaac. The Minneapolis-based credit-scoring company accused the firms of trademark infringement for also using a three-digit credit score model, as well as unfair competition.

 

Fair Isaac, which goes by the name FICO, said it plans to appeal the verdict.

 

How DARE they also use numbers to represent their score.

 

They should have used smiley faces and frowny faces I guess.

[breeze]

I believe their point is, that the Experian and TU scores look so much like FICO scores, that people will be confused, and can be tricked into buying the FAKO scores when they actually intended to buy FICO scores.

 

Look through the posts on here and see how many times that has been the case. Newbies here do not know the difference. And the fact is, lenders use FICO scores, so when consumers buy FAKO scores, and think they have FICO scores, they have been shortchanged and FICO has lost business they could have had if the scores were not so similar. There have even been Experian reps on here arguing that lenders do use their scores. Unfortunately, they seem to be unable to give us even one or two examples. Also, we have received formal complaints when a member, joking around, used a modified Experian logo with the word FAKO in their signature.

[clutchcargo]

Oh I agree with all that, but any use of numbers is going to have that problem if consumers aren't educated about FAKO/FICO. How to accomplish that? I have no idea. It just so happens though that 3 digits works out granular-wise. A two digit would not provide enough range and a four digit (even if the range was 3500 to 8500 hehe) would just be an obvious attempt to not be FICO but still be FICO.

 

JMO

[EvilMan]

Well to be honest, if Fico did win this, then Experian would of turned around and tried to get the US Attorney General to go after them on grounds of Anti-Trust. So Fico would of been screwed later on down the road.

[Ryan1984]

Oh I agree with all that, but any use of numbers is going to have that problem if consumers aren't educated about FAKO/FICO. How to accomplish that? I have no idea. It just so happens though that 3 digits works out granular-wise. A two digit would not provide enough range and a four digit (even if the range was 3500 to 8500 hehe) would just be an obvious attempt to not be FICO but still be FICO.

 

JMO

 

 

The argument that a two digit number doesn't provide enough range just backs the argument that the FAKO's are copying FICO. The range is that large because FICO made it that large. There is absolutely no reason why the range couldn't be 1-100. Hell, they could use letter grades and have plenty of range. Commercial business seems fine with the whole letter grading.

 

All I'm trying to get across is that when they use the same number system it is an obvious attempt to copy. No one in their right mind would pay for a score if they knew NO ONE uses it. Well, maybe some would ....

[breeze]

Oh I agree with all that, but any use of numbers is going to have that problem if consumers aren't educated about FAKO/FICO. How to accomplish that? I have no idea. It just so happens though that 3 digits works out granular-wise. A two digit would not provide enough range and a four digit (even if the range was 3500 to 8500 hehe) would just be an obvious attempt to not be FICO but still be FICO.

 

JMO

 

 

The argument that a two digit number doesn't provide enough range just backs the argument that the FAKO's are copying FICO. The range is that large because FICO made it that large. There is absolutely no reason why the range couldn't be 1-100. Hell, they could use letter grades and have plenty of range. Commercial business seems fine with the whole letter grading.

 

All I'm trying to get across is that when they use the same number system it is an obvious attempt to copy. No one in their right mind would pay for a score if they knew NO ONE uses it. Well, maybe some would ....

 

yup, what he said. If there is merit to the need for more digits, a letter-number combination would do that, and not look like a FICO score. FICO needs to use their advertising budget educating consumers, IMO, because the way they are advertising now is benefiting their competitors. I imagine they are ticked. They probably spend a fortune on advertising, and Experian comes along behind them and gets the benefit.

[Uncle Leo]

It's obvious what FICO's concern is, and I agree that they have done a poor job themselves of making their own product stand out from the crowd, but this kind of "ride the coattails" business model is hardly new or unique, hence I'm not sympathetic to their plight. Success invites competition... get used to it FICO.

 

The last couple times I ordered my reports via phone they all tried to sell me my credit score... THEIR Vantage score... and they all were as vague as possible about exactly which score I would be getting. IIRC one of them never did say exactly. The "Big 3" even know their Vantage score is not the industry standard and is still basically useless, otherwise they'd shut their name as loud as they could.

 

No, I didn't buy. I bought my two FICOs separately.

[Revike]

There's no reason a 100-point range (1-100) couldn't suffice. One point in such a range would be roughly equivalent to 5 points in most Fico ranges. When lenders determine cutoff points, they generally use 10-point multiples anyway (620, 680, etc.).

 

The underlying computations (such as x points for an inquiry) can be fractions of points, and the final score can be rounded to the closest or next highest or next lowest whole number. A two-digit score would work just fine ...

[clutchcargo]

My FICO is almost never a 10-point multiple. My current EQ FICO is 776 for instance. Anyway, based on that I assumed that much granularity was required. A two digit number would only give you 100 different scores. And as you said, a three digit score would be 5 times that (or could even be more if you expanded the range over the entire 100-999 range). In fact, with a lot of the fakos being I wider range, I figured that was what they were getting at.

Edited November 21, 2009 by clutchcargo

[Ryan1984]

My FICO is almost never a 10-point multiple. My current EQ FICO is 776 for instance. Anyway, based on that I assumed that much granularity was required. A two digit number would only give you 100 different scores. And as you said, a three digit score would be 5 times that (or could even be more if you expanded the range over the entire 100-999 range). In fact, with a lot of the fakos being I wider range, I figured that was what they were getting at.

 

 

I think what we're trying to get at is there is no real reason why the scale HAS to be so large. It's only as large as it is because FICO said it should be.

 

In other words, a 1-100 system, even though it only allows 1/5 the range, would fit just fine. Think of it as every 5 FICO points would be worth one of the 1-100 points. Is there really much difference between a FICO of 650 vs 655? For 1-100 a say 50 could be the same as a FICO of 650-655, a 51 is 655-660, and so on (just an example...)

 

I don't know how to better explain it, but just think of this. If the 1-100 was implemented first, and everyone used that....We would think it was VERY odd if someone came along and said, No your score is 350-850. Actually, we would think it was ridiculous. "A good score is 700...lol, where did that number come from?" We would know it as 80 and up, or so, is a good score...

[clutchcargo]

I get what you are all saying. Plus, points wise, I would be closer to BobWang!

 

Therefore I concede.

[lorcan]

I don't feel sorry for the CRAs. FICO started it first or at least were recognized by major creditors first. The CRAs are trying to get on the bandwagon but it is like shutting the barn door after the horse has escaped. Everyone looks at the FICO scores as the definitive ones.

[FonzieSpook]

Well they could use decimal points then. So FAKOs would be in the 0.00 to 100.00 range (so you could have a score of 78.85 for example which would be similar to a FICO 788/789).

 

This way consumers can always tell the difference.

[Ryan1984]

Well they could use decimal points then. So FAKOs would be in the 0.00 to 100.00 range (so you could have a score of 78.85 for example which would be similar to a FICO 788/789).

 

This way consumers can always tell the difference.

 

 

While I understand what you're saying, that would actually double the range in effect. They would have to keep it at 35.0-85.0 to keep the same range. And, in doing that, creates the original problem all over again...

[Revike]

I think Fico is entirely correct in claiming the CRA-created scoring models were designed to intentionally create confusion by using a similar scoring range and a 3-digit score.

 

However, using that as a basis for a lawsuit was an iffy proposition. In addition to the problem of getting the court to agree that the competing scoring models are intentional copies and damage Fico's business, the lawsuit created a confrontation between Fico and the CRAs, whom Fico depends on in part to assist in creating and modifying scoring models. I think the downside of antagonizing the CRAs outweighed the potential benefits of a successful lawsuit.

 

Fico should direct their energy and marketing on reminding lenders that they have tons more experience in credit risk analysis than the CRAs. I also think they are missing a bet by not being more aggressive in packaging score products (like PFico) that banks and credit unions can offer their customers as a perk, and educating consumers about Fico scoring models in general. They need to be a bit more creative than just attaching Suze Orman's name to a product and depending on their website, CB, etc. to do their educational work for them. If they increased their Fico score sales to consumers, that would allow them more pricing flexibility when they deal with lenders, and enhance their ability to suppress Vantage's inroads into the market ...