What is a Vantage Score, understanding your credit
Credit Scores are confusing, there’s just no way around that fact. It’s hard to find straight, concise answers on the web because too often the same basic information is reiterated time after time and you’re still left wondering what’s really going on asking, “what is vantage score, what is FICO score?”
So in lieu of vague, uniformative answers I will do my best to lay things out clearly so the next time you deal with your personal credit it won’t feel like a mentally draining gauntlet.
Here’s the deal:
There are three major credit bureaus (TransUnion, Experian, Equifax) and each credit agency provides a traditional FICO credit score and there has been a new addition to the mix with the advent of the VantageScore.
FICO and VantageScore provide different credit score ranges and are calculated with different metrics.
Three major credit bureaus, providing multiple credit scores with different score ranges. That only makes things more confusing doesn’t it?
I’m sure many readers are already reaching for that bottle of aspirin but I assure you it really isn’t that confusing.
Let’s begin with the FICO Score. FICO is a company that builds models and algorithims by which credit scores are calculated. In other words, they create incredibly complex mathemtical formulas that calculate individual credit scores. Your personal credit information is entered into the formula and out comes your credit score. FICO was the trailblazer in this industry and until very recently was the only scoring formula used by the three major bureaus.
Simple enough right?
Each of the three major credit bureaus uses the FICO score to calculate your traditional credit score. They pay FICO to use the complicated scoring formulas but the bureaus often put their own “special sauce” into the scoring and if you’ve ever pulled all three credit scores at once you will see difference across your three FICO scores.
The FICO scores is on a range of 300-850. Generally a score below 600 is considered poor. 600-700 is considered fair credit and above 730 is considered excellent.
But still you’re wondering what is vantage score?
Well, with the FICO score explained lets turn to the Vantage Score. The Vantage Score was created by a joint effort between the three major credit bureaus in the early 2000′s.
The stated purpose of the Vantage Score was to provide more uniformity between the credit scores produced by the three major bureaus. The Vantage Score uses a different formula than the FICO Score and has been stated to better serve the needs of the underbanked and subprime.
The Vantage Score runs from 501-990; a good Vantage Score is above 800.
Now you’re probably thinking which score applies to me?
The traditional FICO score is more broadly used by all the various institutions that may pull your credit from banks, to auto companies and insurance providers. Chances are when your credit is pulled, the institution is concerned about your FICO score.
That being said, the Vantage Score was built to help the 56% of Americans who have subprime credit and in theory should help more people become credit worthy. There appears to be a brewing rivalry between FICO and the three major credit bureaus and I would expect the Vantage Score to become more prevalent, especially in underbanked and subprime communities.
Many institutions now consider the Vantage Score as a perfectly acceptable substitute so if you find yourself in a position where your FICO score is low it never hurts to ask about the Vantage Score.
It may turn out to help you qualify for that car loan, mortgage, etc.
If you have any more questions about your credit, please feel free to contact me at email@example.com
And the next time someone asks, What is a vantage score? You’ll be in the know.