Court rejects FICO appeal over credit score scale

The U.S. Court of Appeals for the 8^th District rejected a petition by Fair Issac Corp. (FICO) to hear the company’s claim VantageScore Solutions and the three leading credit reporting firms infringed FICO’s trademark scoring scale. The court affirmed all earlier rulings, which said FICO didn’t hold trademark rights to its range of 300 to 850 for individual credit scores. The battle raged for about five years. FICO first filed suit in October 2006 after VantageScore — backed by Equifax (EFX), Experian and TransUnion — launched its credit scoring system. FICO alleged the companies engaged in antitrust, unfair and anticompetitive practices, harming the FICO brand. “I’m extremely gratified to put this lawsuit behind us and I look forward to an open market free from the encumbrance of litigation,” VantageScore CEO Barrett Burns said. FICO said the decision has little impact on its business and FICO scores “remain the most trusted and most used measure of consumer credit risk among lenders.” “Although our efforts thus far have not resulted in a favorable legal settlement, they have helped to advance the important national issue of transparency and fairness when consumers obtain their credit scores,” the company said. “At a time when consumers most need clarity regarding their creditworthiness, it’s imperative that they understand whether the credit scores they purchase are FICO scores, which are used by most lenders to make lending decisions, or merely lookalike scores not actually used by lenders to make lending decisions,” according to FICO. Kerry Williams, group president at Experian Credit Services and Decision Analytics, said the “decision once again confirms the value of competition and choice in credit scoring.” Despite the contentious battle over the scoring model, the companies continue to unveil new products and extend their brands. In January, VantageScore launched the second generation of its credit valuation system, that leverages the core platform to deliver improved predictive performance and allow lenders to look beyond the economic volatility of recent years and reenter the market with confidence, according to Burns. In April, FICO announced new technology designed to help lenders identify the probability of strategic default by looking at a borrower’s credit score. Write to Jason Philyaw. Follow him on Twitter: @jrphilyaw