VantageScore
Encyclopedia
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
.
and VantageScore have allowed the public to know some information about the Credit score
categories and the corresponding calculation weights. 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.
The three bureaus have advertised the VantageScore as something that will help banks and lenders further drill down into the "subprime" categories. Subprime lenders are banks or other lenders dedicated to borrowers with less than perfect credit or harder to substantiate credit.
Unlike FICO’s traditional 300 to 850 scale, the VantageScore goes from 501 to 990, as reported by TransUnion:
A person's VantageScore might not be exactly the same from each credit bureau, since the data each credit bureau collects could still vary. However, in theory, the VantageScore should be more consistent across all three credit bureaus, since the same calculation formula is used across the board.
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. Credit Karma
, a free online credit management service, is another resource where consumers can view and daily update their VantageScore from TransUnion for free.
Credit rating
A credit rating evaluates the credit worthiness of an issuer of specific types of debt, specifically, debt issued by a business enterprise such as a corporation or a government. It is an evaluation made by a credit rating agency of the debt issuers likelihood of default. Credit ratings are...
product that is offered by the three major credit bureaus (Equifax
Equifax
Equifax Inc. is a consumer credit reporting agency in the United States, considered one of the three largest American credit agencies along with Experian and TransUnion. Founded in 1899, Equifax is the oldest of the three agencies and gathers and maintains information on over 400 million credit...
, Experian
Experian
Experian plc, formerly known as CCN Systems, is a global credit information group with operations in 36 countries. The company employs 15,500 people with corporate headquarters in Dublin, Ireland and operational headquarters in Nottingham, England and Costa Mesa, California, US...
, and TransUnion
TransUnion
TransUnion is the third largest credit bureau in the United States, which offers credit-related information to potential creditors. Like major competitors Equifax and Experian, TransUnion markets credit reports directly to consumers.- History :...
). 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
Fair Isaac
Fair Isaac Corporation is a public company that provides analytics and decision making services—including credit scoring—intended to help financial services companies make complex, high-volume decisions.- History :...
.
VantageScore vs FICO score
Both Fair IsaacFair Isaac
Fair Isaac Corporation is a public company that provides analytics and decision making services—including credit scoring—intended to help financial services companies make complex, high-volume decisions.- History :...
and VantageScore have allowed the public to know some information about the Credit score
Credit score
A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person...
categories and the corresponding calculation weights. 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
Fair Isaac
Fair Isaac Corporation is a public company that provides analytics and decision making services—including credit scoring—intended to help financial services companies make complex, high-volume decisions.- History :...
, the original creator of the FICO Score, was not involved with the creation of VantageScore's new formula.
The three bureaus have advertised the VantageScore as something that will help banks and lenders further drill down into the "subprime" categories. Subprime lenders are banks or other lenders dedicated to borrowers with less than perfect credit or harder to substantiate credit.
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
A person's VantageScore might not be exactly the same from each credit bureau, since the data each credit bureau collects could still vary. However, in theory, the VantageScore should be more consistent across all three credit bureaus, since the same calculation formula is used across the board.
TransUnion and Experian offer the score to the public via their web sites. Experian offers consumers their VantageScore through a special subdomain
Subdomain
In the Domain Name System hierarchy, a subdomain is a domain that is part of a larger domain.- Overview :The Domain Name System has a tree structure or hierarchy, with each node on the tree being a domain name. A subdomain is a domain that is part of a larger domain, the only domain that is not...
off its main site. Credit Karma
Credit Karma
Credit Karma, a San Francisco-based website, is a company that provides free credit scores to consumers. Credit Karma provides the TransRisk credit score generated from national credit bureau TransUnion, the VantageScore, and the TransUnion Auto Insurance Risk Score.In addition to providing free...
, a free online credit management service, is another resource where consumers can view and daily update their VantageScore from TransUnion for free.
Score calculation
While the exact details of how the score is calculated are unknown, VantageScore has released the categories and proportions used. 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% |
See also
- Credit scoreCredit scoreA credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person...
- Alternative dataAlternative dataIn economic policy, alternative data refers to the inclusion of non-financial payment reporting data in credit files, such as telecom and energy utility payments. Only 39 of 178 economies have credit bureaus that currently track alternative data....
- Fair IsaacFair IsaacFair Isaac Corporation is a public company that provides analytics and decision making services—including credit scoring—intended to help financial services companies make complex, high-volume decisions.- History :...
- EquifaxEquifaxEquifax Inc. is a consumer credit reporting agency in the United States, considered one of the three largest American credit agencies along with Experian and TransUnion. Founded in 1899, Equifax is the oldest of the three agencies and gathers and maintains information on over 400 million credit...
- TransUnionTransUnionTransUnion is the third largest credit bureau in the United States, which offers credit-related information to potential creditors. Like major competitors Equifax and Experian, TransUnion markets credit reports directly to consumers.- History :...
- ExperianExperianExperian plc, formerly known as CCN Systems, is a global credit information group with operations in 36 countries. The company employs 15,500 people with corporate headquarters in Dublin, Ireland and operational headquarters in Nottingham, England and Costa Mesa, California, US...