What's Your VantageScore

[Annette Hibbler]

I recently heard about VantageScoring and did some research. Thought I'd share what I found here with all of you.

What's Your VantageScore?

Since the 1970’s credit bureaus have used FICO scoring as the main model. However, because each of the three major credit scoring companies compute this score slightly differently from each other, the discrepancies often create problems for both lender and consumers. Vantage Scoring was designed to issue a more standard grading system. It first appeared in 2006. Following the subprime meltdown in 2008, the Vantage Scoring system was upgraded to a 2.0 version in 2010.

The VantageScore has some clear advantages over the traditional FICO such as predictive scoring and a 24 month review of credit (FICO has a six month review) which can help those with little credit history.

How It Works

FICO Scores are largely reliant on consumer payment history and total amount owed followed by length of credit history, types of credit used and level of new credit. The breakdown is as follows:

FICO SCORE
Consumer’s Payment History - 35%
Total Debt Owed - 30%
Length of Credit History - 15%
Types of Credit Used - 10%
Level of New Credit - 10%

The VantageScore is designed to provide a consistent credit score model across all three bureaus to compete with the FICO. It offers lenders a more standardized score. A VantageScore calculates payment history, utilization of existing credit, balances, depth of credit, recent credit and available credit.

VANTAGESCORE

Amount of Recent Credit - 30%
Consumer’s Payment History - 28%
Utilization of Consumer’s Current Credit - 23%
Size of Consumer’s Account Balances - 9%
Amount of Consumer’s Available Credit - 1%

VantageScore uses both a numerical range (501 to 990) for scores (similar to FICO) and a letter grade that is designed to better reflect a consumer’s credit health.

901 - 990 = A or Super Prime
801 - 900 = B or Prime Plus
701 - 800 = C or Prime
601 - 700 = D or Non-Prime
501 - 600 = F or High Risk

The VantageScore method is particularly useful for consumers with little credit history and those with prior negative actions against them but have good recent credit history. The VantageScore is one of a dozen models used by credit bureaus.