One of the things that becomes quickly apparent as you dive into the world of credit scoring is that there is no standard model.
While the FICO score is the most commonly used credit scoring model amongst lenders, there are other models as well, and even variations on the FICO score (how’s that for confusing?).
For the most part, the same information in your credit report is used to compile the different scores, but the weights given to different factors, as well as other proprietary information, are different.
One of the credit scores that you might run across as you look into your credit situation is the VantageScore.
Overview of the VantageScore
This credit scoring model was introduced in 2006, and is a product offered by the three major credit bureaus. Equifax, Experian, and TransUnion created the VantageScore to compete with the FICO score.
You can see your VantageScore for free when you visit the Experian and TransUnion web sites. You can also see it free on sites like Quizzle and Credit Karma.
The Vantage Score is based on more factors than those release by the FICO score.
The factors that go into the VantageScore include:
- Payment History: 32%
- Credit Utilization: 23%
- Credit Balances: 15%
- Depth of Credit: 13%
- Recent Credit: 10%
- Available Credit: 7%
Additionally, VantageScore has a slightly different scale that offered by FICO.
The VanatageScore model runs from 501 to 990. It’s fairly straightforward, with credit being termed either A, B, C, D, or F. Just like in school, an A is the top grade. Each grade advances by hundreds. So, anything from a 900 to a 990 is A credit, and if you have 501 to 599, you have F credit.
The idea, according to VantageScore, is to drill deeper into the subprime borrowers.
It’s a little bit harder to achieve excellent credit under the VantageScore than it is under the FICO scoring model. However, since each bureau’s VantageScore is based on slightly different data (whatever is available in the specific agency’s report on you), VantageScores vary — as do FICO scores.
Does the VantageScore Matter?
While there are some lenders that make use of the VantageScore, it is still less common to the FICO score in use. The VantageScore, although meant to compete with the FICO score, hasn’t made the kind of inroads that some might like.
Tracking your VantageScore for free, though, can have its benefits.
You can use it as a guide to see how your situation might be improving — or deteriorating. Whether your score is rising or falling can give you an idea of overall trends in your finances, and help you improve the situation if you need to.
For example, if you are considering buying a new car you certainly want to know your credit score if you intend to get a car loan. A better score means a lower interest rate. By checking your VantageScore you can see how strong your score is. If it’s not quite where you need it to be to get the best rates then you can get working on improving your credit score before you look for that car.
It’s a great benefit to your finances to consider some of the other scoring models out there, if only to see a snapshot of your current situation.
In the end, more credit scoring models are likely to be developed.
There has been a demand for scores that reflect consumer behavior beyond just credit. Many people prefer to use cash rather than credit but current scores don’t reflect well on those people, even if they are responsible with their money.
Additionally, even FICO offers variations of its scoring algorithm that focus on specific types of debt, such as weighting factors related to mortgages for home loan applications, and other changes.
The best you can do is attempt to be responsible, and keep your credit in overall good shape.