whats the straw man afraid of

What’s the Straw Man afraid of?

Date: June 24, 2020

Dear Colleague:

As we wrap up our 10th anniversary year, VantageScore Solutions stands at a critical, yet exciting turning point. With a full decade in the marketplace and annual score usage of more than 8 billion in the last year, no one can call us a new kid on the block any longer. Yet we’re still very much a challenger, fighting hard to make inroads against a formidable, established brand.

One of our recent white papers demonstrates that many of the 30-35 million consumers left unscoreable by traditional models nonetheless have sufficient financial means to manage and repay loans, including mortgages. The study also shows that these creditworthy unscoreables (those with VantageScore 3.0 scores of 620 or higher) have less access to mainstream credit (in the form of credit card spending limits) than their scoreable peers.

Our rival has responded to this research, and to our ongoing efforts to end legacy policies at Fannie Mae and Freddie Mac that require its brand of credit score, with claims that its scoring criteria are the only ones that are legitimate. As “evidence,” it cites a model it invented, which purports to mimic VantageScore 3.0.

There’s no need for such a straw man. More than 2,400 industry participants, with more than enough sophistication to test and apply real scoring models for themselves, see real strategic value, from real VantageScore models, every day. Leading mortgage lenders, a bipartisan congressional bill, and the Mortgage Bankers Association all call for providing mortgage lenders with the ability to choose whichever validated credit scoring model works best for their businesses.

Efforts to undermine the advantages of healthy competition by our rival – which routinely claims to own 90 percent of the U.S. credit scoring market—remind me of another battle between a challenger and a legacy megabrand. When regional favorite Ben & Jerry’s first sought national retail distribution, the dominant premium ice cream brand, Haagen-Dazs, and its then-corporate parent Pillsbury attempted to deny the newcomer a toehold: Haagen-Dazs told grocers it wouldn’t deliver its popular products to any stores that carried Ben & Jerry’s. Ben & Jerry’s responded by calling out its much-larger adversary in a grassroots campaign that asked Pillsbury, via buttons and bumper stickers, “What’s the Dough Boy afraid of?” Consumers responded with letters and phone calls (these were ancient pre-Internet times), and Pillsbury relented.

Friends and family know that ice cream is one of my not-so-secret passions. I’m grateful that I have the opportunity to choose between Haagen-Dazs Dulce de Leche and Ben & Jerry’s Chunky Monkey at the supermarket, and I think lenders who use credit scoring models should have a similar option. What’s the straw man afraid of? Competition?

All the best for the New Year,

Barrett Burns