For over fifty years your credit score has been calculated using the Fair Isaac and Co's system and so it is generally described as your FICO score. Now there is a new system known as VantageScore. This is just over one year old having been launched in March 2006. So why was a new system needed, and how does it differ from FICO? What are the advantages of VantageScore, and more importantly, what are its disadvantages? And finally, how can you find out your VantageScore?
It is a well known fact that the three credit bureaus, Experian, Trans Union and Equifax will report a different credit score for an individual based on the records that each company holds. VantageScore was created with the intention of providing greater consistency between the three bureaus so that these discrepancies would be removed.
The two systems differ both in the way that the credit score is calculated and in the way the result is presented. Both systems use the same five factors in their computation, but whilst FICO places most emphasis on payment history and amount owing, making up 65% of the score, these factors only count for 47% of the VantageScore. For the results FICO uses a figure between 500 and 850 with anything over 720 being regarded as prime. VantageScore ranges fro 501 to 990 with an additional classification of letters A-F for each group of one hundred. So A is 901-990 which is regarded as super prime, with C 701-800 being prime and at the other extreme. F 501-600 treated as high risk.
One criticism of FICO is that while a score of 720 and above gives a clear green light to a potential lender, there is no generally accepted grading of the lower figures. This problem is solved with the VantageScore by use of the letters A to F which enable you to tell at a glance into which category a borrower falls. However there are critics of this system too who point out that within each category there will be a wide variation. For instance a score of 698 is only three points short of prime, when 603 is just two points clear of high risk, yet both fall into category D.
The main reason why FICO credit scores vary between the three bureaus is the variation in the data that each receives. While the promoters of VantageScore say that their system will produce more consistent results, they admit that ultimately this depends on the quality of the data.
Your current FICO credit score can be obtained from each of the three credit bureaus, but to date only Experian will supply you with your VantageScore and it will cost you $5.95.