WSJ Article: FICO Score’s Hold on the Credit Market Is Slipping

Another article about credit. This one stated fico is loosing its relevance. https://www.google.com/amp/s/www.wsj.co ... 1627119003

I can't read it as I've already met my max read WSJ articles and don't have a membership.

Is it suggesting Fico is losing its relevance due to competition (maybe internal systems and such?) or are lenders lowering their standards / approving lower scores?

Yes. That’s it.

Which one? Or both?

https://wmleader.com/general-other/1167 ... -slipping/ Apparently Capital One has joined Synchrony in not using FICO scores as much for credit decisions and Chase was already distancing themselves from FICO. Couple that with calls for regulation or complete government control of credit scoring and it’s easy to see the decline.

I wonder how FICO charges for scores vs Vantage Score. I would think VS3 at least is a lot cheaper.

A lot of new fintechs on the block with alternative credit scoring models, typically cash flow based analysis.

I would think lenders would want to look toward their own internal scoring system, similar to what Chase has done. While it may be some more work up front, in the long run I'd imagine it would save them money and it could also be custom-tailored to their needs, making it more relevant on an individual level than Fico.

BrutalBodyShots wrote: ↑Wed Jul 28, 2021 10:18 pm I would think lenders would want to look toward their own internal scoring system, similar to what Chase has done. While it may be some more work up front, in the long run I'd imagine it would save them money and it could also be custom-tailored to their needs, making it more relevant on an individual level than Fico.

This is true, but the real strength with FICO is their huge profile dataset compared to individual lenders who only have their own customer profiles to learn from. It may just be that a limited dataset - such as only Chase members - works just as well.

It just seems to me that Fico score in and of itself as a singular determining factor is rarely the case. Sure there are examples like needing X middle mortgage score, but more often than not from my experience Fico score takes a distant back seat to actual profile. You hear all the time about certain lenders being accepting (or critical) of certain criteria such as thin files, young files, BK friendly and so on. It seems to be that their internal beliefs/procedures are ultimately what matters most, while Fico score is just one piece of the bigger puzzle.

BrutalBodyShots wrote: ↑Wed Jul 28, 2021 11:51 pm It just seems to me that Fico score in and of itself as a singular determining factor is rarely the case. Sure there are examples like needing X middle mortgage score, but more often than not from my experience Fico score takes a distant back seat to actual profile. You hear all the time about certain lenders being accepting (or critical) of certain criteria such as thin files, young files, BK friendly and so on. It seems to be that their internal beliefs/procedures are ultimately what matters most, while Fico score is just one piece of the bigger puzzle.

The only real role scores play in UW for either of the credit unions I've worked at is determining your rate. An extremely low credit score could be reason for denial, i.e. below the bottom score of the lowest rate tier, but it's your DTI and what's actually in your profile that counts for approval, amount lent, etc at both places.

Good references above. I would think that many non-loan/revolving products operate under similar circumstances in that Fico score isn't the driving force behind approval/denial in the majority of cases.