The long-simmering battle between FICO and VantageScore heatedup a bit this week as VantageScore announced its latest scoringmodel and FICO announced a partnership with FactorTrust.

VantageScore is the seven-year-old organization jointly foundedby the three national credit reporting bureaus to develop analternative to FICO, for which they need to pay a licensingfee.

Vantage has rolled out two previous versions of its scoringsystem since its founding in 2006 and the third, dubbedVantageScore 3.0 provides the ability to score between 27 millionand 30 million additional consumers who had been consideredpreviously “unscoreable,” often because they lacked conventionalcredit histories, that company said.

“The VantageScore 3.0 model is both a new model, and new pathforward for VantageScore Solutions and the credit scoring industry.The model was built with a lender's implementation and riskmanagement needs in mind, in conjunction with a deeperunderstanding for what information consumers need to become bettermanagers of their own credit,” said Barrett Burns, CEO of VantageScore Solutions, in a preparedstatement about the new scoring model.

“Today's competitive lending environment dictates that lendersneed access to as many creditworthy consumers as possible withintheir target universe, demanding the highest level of predictiveperformance from the credit scoring models they use,” Burns said.“The VantageScore 3.0 model facilitates this, and allows (riskmanagers) to confidently extend credit to tens of millions ofconsumers that were previously invisible to them so that thoseconsumers have a greater chance to access mainstream credit, whichis one of our principal goals.”

VantageScore claims to be used by seven of the top 10 majorfinancial institutions but did not identify them or say whetherthey used the VantageScore exclusively. The company has also notyet said whether any credit unions use the score, a reticence thatVantageScore's Burns explained as having roots in the company'sdesire not to appear to be colluding on its marketing itscores.

That possible impression exists because VantageScore's ownershipby the three big credit bureaus and has already been the subject ofa lawsuit from FICO, which FICO lost.

VantageScore said its new model has included a scorecard togenerate scores for those consumers with little or no creditactivity. The new model also includes data from rentals,utilities and telecom payments to help generate scores.

In this regard the new VantageScore is similar to a new effortannounced last week between FICO and FactorTrust to generate newscores that will address financially underserved consumers.

FactorTrust, aleading aggregator of payment data from financially underservedconsumers, and FICO,announced their new partnership which they said willincorporate more data from underserved consumers in credit scoringmodels.

The companies said adding data from underserved consumers intowidely used credit models will allow lenders to better judge – andlend – to consumers who may have thin or even non-existent creditbureau files.

“Alternative data can be a valuable supplement to traditionaldata sources for risk assessment,” said Andrew Jennings, FICO'schief analytics officer and head of FICO Labs. “By combiningalternative data, advanced analytics and decision services, lenderscan now make better credit decisions on people who don't have acredit history, and who have therefore found it hard to obtaincredit.”

FactorTrust has been aggregating data from financiallyunderserved consumes since 2005 and has been working to challengestereotypes about them, reporting, for example, that 32% of financially underserved consumers own their ownhomes.