FICO now competes with Vantage Score but Equifax, Experian and TransUnion still offer both score options. This is partly because FICO is so widely used and accepted by commercial lenders and is the only credit scoring system recognized and used by the Federal Government when determining the credit worthiness of a consumer for a government guaranteed loan.
The goal of the credit bureaus has been to wean users off the FICO model and start using Vantage Score instead due to the fact that the credit bureaus have to pay FICO a royalty each and every time a FICO score is pulled. However, due to the overwhelming majority of lenders and credit issuer’s familiarity with the FICO model, the Vantage Score has not taken the credit world by storm as fast as the “Big 3” would have liked
All three credit bureaus now offer Vantage Score in addition to FICO score to calculate the credit score, instead of only offering FICO’s.
When using “programs” such as Credit Karma, and MyFreeCreditReport.com the consumer will think that they are looking at a FICO score, but in reality, what they are looking at is the Vantage Score generated by the credit bureau(s). Which by the way is designed to generate a higher score than a FICO score and in the opinion of this writer is done so on purpose to give a consumer a false sense of what his/her credit score really is.
In reality, it really makes no difference in credit score variations. Credit score variations are inevitable because the data the credit bureaus collect is still derived from different sources, not all data furnishers report their information to all of the credit reporting agencies. So, the problem of varying credit scores will not be solved by the new Vantage Score.
The three bureaus are branding the Vantage Score as something that will help banks and lenders further hone the subprime categories. Subprime lenders are those banks and lenders dedicated to borrowers with poor credit or harder to approve loans. Subprime loans have higher interest rates and fat lending fees.
In today’s credit crunched economy, this is a fast-growing market and the credit bureaus are hoping to use that as a selling point for Vantage Score. Slick marketing!
Unlike FICO’s traditional 300 to 850 scale, the Vantage Score goes from 501 to 990. Here is a breakdown of the scores with the respective rating:
- A: 901–990
- B: 801–900
- C: 701–800
- D: 601–700
- F: 501–600
As one can see, simply by virtue of the Vantage Score scale starting 351 points higher than the traditional FICO Score scale, a consumer may look at a Vantage Score of 680 and think that is a pretty good score, but in reality, that would equate to much lower FICO score. It can all get very confusing and unfortunately (in the opinion of this writer) that is exactly what the credit bureaus are going for.
For additional information and help regarding any credit issue please feel free to contact The ASCENT Network.