VantageScore

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VantageScore is the name of a new credit rating product that is now being offered by the three major credit bureaus (Equifax, Experian and TransUnion). The new product was announced by the three bureaus on March 14, 2006. It is essentially a way for the three bureaus to rival the current dominant player in credit scores (Fair Issac with their "FICO Score").

1 VantageScore vs. FICO Score
2 When is VantageScore available?
3 What Factors Contribute to the Score?
4 See also
5 Sources

[edit] VantageScore vs. FICO Score

Where Fair Issac was allowing the public to know some information about the FICO Score categories and the corresponding calculation weights, the three bureaus are keeping that information secret for VantageScore. All three bureaus use the same formula to calculate the VantageScore, however, there are still discrepancies between the resulting scores if ran for each of the credit reports. This is due to different data the three bureaus have on the credit reports.

The three bureaus are positioning this new product as something that will help banks and lenders further drill down into the Subprime categories. Subprime lenders are those banks/lenders dedicated to borrowers with less than perfect credit or harder to substantiate credit. Subprime loans tend to have higher interest rates. This is a fast growing business and the three credit bureaus are hoping to use that as a selling point for VantageScore.

Unlike FICO’s traditional 300 to 850 scale, the VantageScore goes from 501 to 990, as reported by TransUnion:

            A:  901-990 
            B:  801-900 
            C:  701-800 
            D:  601-700 
            F:  501-600

Don’t expect your Vantage Score to be exactly the same from the three bureaus, because the data they collected may still vary. However, in theory, they should match better compared to what we have now that are not only based on inconsistent data but also calculated using many different formula.

[edit] When is VantageScore available?

The new system was unveiled on Tuesday, March 14, 2006 by VantageScore Solutions, LLC, jointly owned by the three bureaus. It indicated that banks, mortgage lenders and credit card companies would be able to order the VantageScore immediately. However, it is going to take a few weeks or months before it is offered to consumers.

[edit] What Factors Contribute to the Score?

While the exact details of how your score is calculated is unknown, VantageScore™ has released the catagories and proportions used. What contributes a positive score in the catagories is unknown and to what degree particular data affect the score is also unknown. It should be noted, however, that the score is meant to determine how likely a given customer will pay the loan back on time and in a consistent manner, so values which show behavior contrary to these are more likely to affect the score negatively and vice versa.

32% of your score is Payment History (i.e. how timely and consistent your payments are)
23% of your score is Credit Utilization (i.e. debt-to-credit ratios and how much credit is available)
15% of your score is Credit Balances (i.e. what your total debt is; most likely, delinquent debt is counted more harshly than current debt)
13% of your score is Depth of Credit (i.e. ratio and number of various types of credit such as revolving accounts, loans, etc.)
10% of your score is Recent Credit (i.e. how recent and many new hard inquiries and new accounts there are)
7% of your score is Avalible Credit (i.e. how much credit can be accessed, for example, could you spend $50,000 of credit tonight or within the next week)