VantageScore
VantageScore is the name of a credit rating product that is offered by the three major credit bureaus (Equifax, Experian, and TransUnion). The product was unveiled by the three bureaus on 14 March 2006. The VantageScore is an attempt to compete with the FICO score produced by Fair Isaac.[citation needed]
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[edit] VantageScore vs FICO score
Both Fair Isaac and VantageScore have allowed the public to know some information about the Credit score categories and the corresponding calculation weights.[1] All three bureaus use the same formula to calculate the VantageScore; however, there are still discrepancies between the resulting scores if run for each of the credit reports. This is due to different data the three bureaus have on the credit reports. Fair Isaac, the original creator of the FICO Score, was not involved with the creation of VantageScore's new formula.[2]
The three bureaus have advertised the VantageScore as something that will help banks and lenders further drill down into the "subprime" categories.[citation needed] Subprime lenders are banks or other lenders dedicated to borrowers with less than perfect credit or harder to substantiate credit.[citation needed]
Unlike FICO’s traditional 300 to 850 scale, the VantageScore goes from 501 to 990, as reported by TransUnion:
- A: 900–990
- B: 800–899
- C: 700–799
- D: 600–699
- F: 501–599
TransUnion and Experian offer the score to the public via their web sites. Experian offers consumers their VantageScore through a special subdomain off its main site.[3] Credit Karma, a free online credit management service, is another resource where consumers can view and daily update their VantageScore from TransUnion for free. [4][5]
[edit] Score calculation
While the exact details of how the score is calculated are unknown, VantageScore has released the categories and proportions used.[6] What contributes to a positive score in each category, and to what degree particular data affect the score, is unknown. The score is meant to indicate the likelihood that a customer will pay the loan back on time and in a consistent manner; values which show behavior contrary to these are more likely to worsen the score, and vice versa.
| Category | Description | Weight |
|---|---|---|
| Payment History | how timely and consistent your payments are | 32% |
| Credit Utilization | debt-to-credit ratios and how much credit is available | 23% |
| Credit Balances | what your total debt is; most likely, delinquent debt is counted more harshly than current debt | 15% |
| Depth of Credit | length of credit history | 13% |
| Recent Credit | how recent and many new hard inquiries and new accounts there are | 10% |
| Available Credit | how much credit can be accessed, for example, could you spend $50,000 of credit tonight or within the next week | 7% |
[edit] See also
[edit] References
- ^ http://www.vantagescore.experian.com/factors.html
- ^ Fair Isaac's Reply to the VantageScore, From a FI Employee - The Credit Info Center Forums
- ^ VantageScore from Experian
- ^ "Credit Karma Launches Two New Free Scores for Consumers". Marketwire. 2011-01-06. http://www.marketwire.com/press-release/Credit-Karma-Launches-Two-New-Free-Scores-for-Consumers-1376491.htm/. Retrieved 2011-03-04.
- ^ "Want a free VantageScore?". Bankrate. 2011-01-05. http://www.bankrate.com/financing/credit-cards/want-a-free-vantagescore/. Retrieved 2011-03-04.
- ^ VantageScore Benefits for Consumers
