Last week, FICO lost their federal lawsuit against the credit bureaus (all but Equifax) and VantageScore Solutions. The lawsuit claimed, among other things, trademark infringements and unfair competition. Now FICO has to decide whether to continue their battle with two of the three credit bureaus or pick up the pieces and move on. According to statements made by FICO's CEO, Mark Greene, it looks like the company will appeal the verdict.
It's been my experience, as someone who has been a part of a fair share of lawsuits, that neither party is really as happy or as upset as they may seem by reading their respective press releases. FICO still maintains a dominant position in the credit scoring market and still has legal options in their federal lawsuit. The credit bureaus (minus Equifax) and VantageScore Solutions still have to defend against those continuing legal maneuvers, and Vantage still enjoys a paltry 5.7 percent of the credit score market, according to legal documents filed previously.
And if you completely ignored any speculation this verdict has brought up in the world of credit score sales, one thing remains crystal clear: the barriers to adoption for any new credit score are the same today as they were last week before the verdict. The GSEs (Fannie Mae and Freddie Mac) still haven't endorsed any other score besides FICO. In fact, on September 10, 2009, Freddie Mac reminded their customers to be sure to use FICO scores from each of the three credit bureaus. Point being, this verdict helps VantageScore, but work still remains if they want to take any serious market share away from FICO.
John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.