The New Vantage Credit Score. Their "Ad"Vantage or Ours?
Posted: Sunday, March 19, 2006
by Robert Tenorio
Creditegghead.com
The New "Vantage" Score. (Their "Ad"Vantage or ours?)
It’s no secret that your credit score affects every aspect if your financial life. Your three digit credit score impacts your mortgage interest rate, your ability to secure low interest credit cards, and possibly even your ability to land that great new job you’ve been eyeing. Your credit score is like your financial DNA that identifies you as a person who is a high credit risk or not.
The Fair Isaac Corporation is different from the three major credit bureau’s, Experian, Transunion and Equifax, in that, Fair Isaac’s only business is to calculate’s credit scores and sell them to consumers and lenders. They have seemed to push themselves to the top of this industry and have high name brand recognition in the profitable business of selling credit scores to lenders who want to lend us money. At the same time, the big three credit bureau’s compile and sell credit reports but also calculate and sell their own version of our credit scores. Each bureau has developed their own name for their credit score as well. At Equifax, your credit score is known as the Beacon credit score. At Transunion, it’s call Empirica. At Experian, it goes by the name of "Experian/Fair Isaac Risk model". Confused yet? In addition, these credit scores are likely to all be different numbers with each company if you were to check your score with each.
The "Vantage" Score
So, do we really need another three digit number that describes a consumers credit risk to lenders? Apparently Experian, Transunion and Equifax thinks so. They have announced this week that they are producing a more consumer friendly credit score designed to be more understandable to the industry. But is it really and who really benefits from this change?
Here are some facts to consider. Apparently Experian, Transunion and Equifax are all going to drop their individual former names for the credit scores and now all are going to be known as a Vantage credit score. At first I thought, what a great idea, know consumers will have one Vantage score that represents the credit score from Experian, Transunion and Equifax. Consistency across the board at last! Wrong. That’s not the case at all. Each major credit bureau will still individually calculate a consumer’s credit score and sell it to the financial world. These credit scores are still likely to be different numbers with each company if you were to check your score with each. The only thing they have changed is that the three bureau’s have agreed to call their credit score numbers the new Vantage score number.
So basically what we have here is name change and a repackaging of an old product. Sound’s like a huge buzz generated to give new focus on an old product that has a shiny "bell and whistle" attached. Now to make it even more confusing, Experian, Transunion and Equifax have decided to interpret their credit scores by using a scale they have created which is different than the industry norm. Prior to this week, a consumers credit score was interpreted as shown below to the left. Compare this with the way the Vantage score will be interpreted on the right.
FICO CREDIT SCORE
(Range is from 300-850)
720 + --- Excellent
680-719 Good
640-679 Fair
599-639 Poor
VANTAGE CREDIT SCORE
(RANGE IS 501-990)
901-990 = A
801-900 = B
701-800 = C
601-700 = D
501-600 = F
So there you have it. You are know up to speed. It is expected to be about six months to a year to see whether or not this new change will take off and how it will impact the industry. For now, just remember the importance of your credit score no matter which scale is used to interpret it.
By: Robert Tenorio, Attorney at Law and owner of http://www.creditegghead.com, a consumer reference website for improving your financial health.
This Article has been viewed 9,136 times. (Not updated in real-time.)
More commentsGreat article, but I don't think the new Vantage scoring system is fair (or accurate). My FICO score is 697 which puts me as "GOOD", but my Vantage score is 701 (only 4 points difference) and puts me on the edge of "C" & "D". Numbers in general are looked at differently than letters. A "C" or "D" in general doesn't look very good.
Interesting article! but I Don't think Vantage scoring is going to help people trying to bill up there credit.
VantageScore creators should be sued for the violation of Fair Credit Act. My VantageScore is 659 (a mid-D) while my FICO score on the same day was 719, which is good. Number one reason for the low score was "low amount of open real estate accounts", meaning my affordable mortgage in a midwestern town. Including the size of your mortgage in their formula is the same as using income, which is illegal. Income should factor in how much a person can borrow, not how much interest they should pay.
Your article doesn't present the entire truth, and THAT should be illegal. The Vantage score takes many more factors into consideration, thus, it actually gives consumers a broader range in terms of allowing them to have a better rating. Also, as each of the bureaus contain different information in their credit files, the consumer could apply Vantage score to each file from each bureau and still get a different number. Not to mention the fact that if a lender isn't using all the criteria available to calculate a person's credit, they are not going to get the same score anyway. Most lenders pick and choose which criteria they feel is important and each item you lose will have an affect on the overall score that you receive. To compare Vantage and FICO is like comparing apples and oranges. To illustrate: With VantageScore, the factors contributing to the score include: • 32% payment history • 23% utilization of available credit • 15% credit balances • 13% length and depth of credit history • 10% recently opened credit accounts • 7% available credit and compare that to FICO: For FICO, factors contributing to the score are: • 35% payment history • 30% amount owed • 10% types of credit in use • 15% length of credit history • 10% new credit As you can see, they are completely different animals.
I forgot to add, the bureaus are NOT calling their score the Vantage and selling a different score. Each bureau's website clearly states which score you are getting. Also, the use of a universal scoring system depends on lenders. The Big Three can work all day and night to agree on a scoring system, but it doesn't mean a thing if lenders refuse to use that system.
The question seems to be this: Is the Vantage scoring model used by any Bank, Mortgage Company, etc? Or is it simply another ruse used by the Credit Bureaus to sell to consumers? Such as the TransUnion Personal Credit Score? Yep, it's a personal score all right. Because no lender would ever consider it, it's just for you, and no one else. Now that's not what I call serving the Public Interest at all...
left by FATZUKI < The entire credit industry is a racket, three different sites, info, and scores, a no win for the consumer
The low Down:Before:the 3 pays FICO for his scoringnow:The 3 dont want to pay FICO any more and developed their own scoring called Vantage.
This new scoring system makes it harder for people to obtain credit and get good interest rates. Its not fair I use to have good credit but under vantage im now a D, thats near failure, the new score is not fair and it only helps the credit bureau's by saving them money so they wont have to pay for FICO.
so how do you translate your vantagescore to a fico score?my vantagescore is 948, but I don't want to pay to see my FICO.any ideas/comments?
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