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VantageScore………….What Is It???

This Post is the last in a three part series of Posts on how Credit Scores are used and developed. The first two were “Credit Scores Where Did They Come From & What Are They???” and “Why Are Credit Scores Different Between Credit Reports & Reporting Agencies”.

VantageScore is a cooperative effort by the three major Credit Reporting Agencies Equifax, Experian and TransUnion. This development began in 2005 as a result of public demand for a more consistent, and objective way of producing Credit Scores, as well as an easier way to understand and apply them.

The hope is that VantageScore will accomplish those objectives by developing a scoring formula that will be used by all three Credit Reporting Agencies, since this is a combined effort by all three. Right now all three Credit Reporting Agencies use a formula that they each developed independently of each other, so we have three different ways of arriving at a Credit Score, and as a result three different scores per individual.

VantageScore will use a different scale for reporting credit scores. In stead of using a numeric value between 350 to 850, VantageScore will use letter values much like an academic grading scale A, B, C, D, and F. Each of the grade levels will represent a numeric range, for example:

However, VantageScore will still use the same criterion that is used now to develop Credit Scores as is now, but they will give different weights to these categories then is given to them under the present scoring system. Payment History will continue to be the category with the highest value, but Available Credit which now represents 30% of the value of a Credit Score, will only represent 7% of the Credit Score under the new system.

When VantageScore will replace the present Credit Scoring System is still unknown, but hopefully the change will accrue in the not to distant future. I hope these three Posts have given those that have read them a better understanding of Credit Scores as well as a better understanding of how to maintain and improve them.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Posted by George Souto on 05/07/2007 04:54 PM

Comments (48)

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Originally posted at: George's Blog: VantageScore………….What Is It???

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48 Comments on VantageScore………….What Is It???

MAY

2007

Credit scores are pretty confusing and the way they are used to rate insurance, etc is even more confusing.

I read everything I can about credit because we had some unfortuante things happen before and we are working on rebuilding it now, but I have a really hard time understanding what to do. This helps some. Thanks!

Judi, you are right it can be confusing if it isn't something that you have to deal with everyday.

Christina, I work with people in trying to repair their credit, and I would be happy to give you advice on what you need to do to get yours back to where it needs to be. Sometimes it can be as simple as just reducing the amount on your credit cards. Also my two previous Posts might help you better understand what you need to do.

George

Very informative post. At some point, we're going to have to sit down together and look at my credit report. I can only imagine what it must look like right about now. Have a great evening.

George... just my opinion, but is this something that we need? If you have a 600 credit score, that means I have an "F"... that's as bad as you can get, when you and I both know, even having a 590 isn't all that bad, depending on your credit history. Did I miss something here? Why would we want to go in this direction? thanks

jeff belonger

I agree with Jeff

Lewis Poretz

SERVING A COMMUNITY

means being a part of it

Ed, it would be my pleasure to do that for you.

Jeff, from what I understand about VantageScore as it is presently being developed is that a 600 or "F" with them is not the same as a 600 score is now. For example a perfect score now would be 850 but under their point system an "A" could be as high as 990. They are trying to make this more like school grades, and if you have less than a 60 on a test in school you fail. They feel that this will be easier to understand. I guess I will hold my judgment on it until it is actually implemented and working.

Lewis, like the end of my comment to Jeff, I will reserve judgment on it until it is up and running. But if the three major Reporting Agencies are going to implement this we better learn it and understand it.

George,

Great blog, Do you think that it will be for better this new kind of scoring? hopefully. I d onot like so much how equifax, transunion and experian make their computations or formulas to score people. Even when we have the base about the payment history, etc, etc, they have different methods qualify people.

Ray, I guess the one thing that I would see as an advantage with VantageScore is that all three major Reporting Credit Agencies would have the same Credit Score. Right now there can be a huge difference in the Credit Score from one to the other. But will this new method affect the scores for the better or the worst, I don't know, we will have to wait and see.

MAY

2007

Great information, George, thanks. I had heard about the Vantage score but it was not clear. How will a score derived in the old way translate? In the old sytems a score in the high 700s is considered quite good as I recall. But here you would get a C. Is the numerical scale different? Is the only advantage the grade that is more readily understood by consumers, perhaps, and better consistency?

Jeff

Great job of explaining it. If we go to the vantage score, why will we need three reporting agencies?

very helpful information and I LOVE the colors George - you are so good at explaining this "credit score" thing - I will make this part of my arsenal of information for my buyers (if you don't mind) - and giving you credit, of course.

George.... thanks for your input. And I understand and agree with how grade schools grade, but I don't think they really need to change anything. Besides, it will be up to FNMA and Freddie, if they adopt this. But to say that someone has an "F" with a score of 600? That's pushing it big time. Besides.... in all honesty, why make it easy to understand just for the sake of understanding, when it might not be used in the underwriting system. As well as you know, you have down 100% convnetional deals with 585.

In my opinion, I just think it's another company trying to push their product to make some money. That's how I look at this. Anyhow... I guess we'll see... thanks

jeff belonger

Jeff D, the way I understand it is that a 700 score in the old system is not the same as a 700 score in the new system. For example a 700 score in the old system will probably be equal to an 800+ score in the new. VantageScore is supposed to be easier for the public to understand, but more importantly there will not be different scores for each Credit Reporting Agency, they will all be the same.

Randy, very good question and my answer is I don't know why, except that each of the three Major Credit Reporting Agencies right now specialize in different areas of the country. For example TransUnion is the Major Reporting Agency for my part of the country, the Northeast. That is the only explanation that I can think of for still maintaining three agencies. The other of course would be a financial reason for each of the three Major Agencies. Some how it always seems to come down to money.

Ines, please feel free to use what ever you like if you think it can be of help for you.

Jeff B, your right everyone will have to get on board with this. As far as the scores go, like I commented to Jeff D, the scores are not equal for both systems, so a 600 score under the VantageScore System is probably equal to a 500 score under the FICO System, so we can't look at them the same way. I am not sold on the VantageScore System being easier to understand, but I do like the fact that their would only be just one score for all three Major Credit Reporting Agencies.

MAY

2007

George,

Like your two other related post, this was informative. If this system will mean a more uniform formula across the credit agents I am all for it.

George,

If that is the case that you wrote, it will be awesome, yes, I have seen a lot of discrepancies on the 3 credit report agencies, when they score, lets wait and see.

George - This was a great series. Very informative. I plan to do a story on my other blog and link to your series. Hope you get some hits! Enjoy the google love!

Jennifer, I also hope that if this is going to be the system of the future that it will be a change for the better.

Ray, I hope it works as they are saying it will.

Linda, thank you for linking me to your other blog, you are very generous in doing that.

George~ Thanks so much for the very informative post! I had heard about the possible switch and this made it clearer. I will check out the earlier posts as well. I've been striving to learn alot more about this stuff;)

Laura, I hope you will find the other two Posts worth the time to read.

This is awesome information! I look forward to reading and bookmarking the other articles as well!

George, I think a change is a good thing. One score, so everyone understands and is on the same page. Also, they should make it so the consumer sees the same score the lender sees. Nothing worse than working on your credit to finally get over 700(all 3 according to an online credit service) only to have a lender pull it and it's 30 points lower. It happened to me and it was like someone stuck a pin in my balloon.

Geroge,

Like you said, VantageScore is still developing. Any time there's an improvement to the current system, whether FICO or something else, we ought to welcome it. Let's see what FICO will do to counter the threat to its dominance.

Very interesting information. Seems to me that the old system of having a number worked well. I think the problem was having 3 different numbers from the 3 different bureaus. Hmmm. Interesting.

George, Is there a target date when this new system will be the standard? I'm a little slow to change....

Yvonne, glad you found it informative.

Bryant, that is a very good point, hopefully this change would not only produce just one score, but also a move toward just one type of Credit Report where Mortgaga, Auto, Consumer, etc. would all be the same.

Esko, they might but I have not heard anything about any efforts on their part to change.

Debi, that was and is one of the major problems with the present system in my opinion.

Dan, sounds like you and I deal with change about the same way. I have not heard anything about when this system might go into place. The next time one of the Credit Companies that we use comes in for a meeting I will ask them that.

I really like the visuals, they help a lot. Nobody ever explained credit to me so well.

Dena, thank you for say that :)

Thanks for taking the time to lead us throught the credit scoring maze. This is certainly confusing -- I hope the new system is better. It can be difficult to correct information and I wonder if there will be a mechanism to make that easier.

Joan, it can be difficult to correct things on a credit report, but it does not have to be. If you work with someone who knows what they are doing, it can be done quickly.

GOOD INFORMATION.....

Thanks

MAY

2007

Hi George, thanks for the post! Great info! I've been researching info about this and your post was helpful! It will be interesting to see how it all works out. I bookmarked this.

Fran, thank you.

Vickie, there really isn't a lot of info on this yet, all we have right now is the basic concept of how it is suppose to work, but no time line on when it might be incorporated into the Lending Industry.

I would like to thank Linda Davis, for having linked all three of the Posts in this series to her other blog http://blog.ctrelocation.com/ If you have not check out Linda's other blog before, I would like to suggest that you do so. Linda does a great job with her blog on ActiveRain, and an equally great job with her other blog.

MAY

2007

George,

Hope that it works too :)

Ray, well maybe one day they will implement it and we will see.

MAY

2007

Sorry to not comment earlier George. You make some interesting points. Too bad people are just staring to understand the scores now and then it will all change.

Phill, you are right as always, people are statting to understand the present system better, but I do see it as a plus if we can have just one score instead of three. It will be interesting if VantageScore ever becomes a reality.

MAY

2007

I have often wondered why the credit scoring process has never been standardized. It would seem to make more sense & be a more efficient. I think that VantageScore may provide some useful direction if this process ever become a reality.

Lola, I agree with you, but no one seems to know when it might be addopted.

great info thanks for sharing your posts do make it easier to explain to the client

MAY

2007

It would be useful in the credit agencies all used the same scoring system. I have seen 50 point differences or more, on the same person. Its hard to explain that to a consumer. And then you have to explain that the FICO score is the one that really counts!

Thesa, I am glad that you feel this is going to be helpful to you.

Wayne, yes you are right a 50 point swing from one score to another is not unusual.

JUN

2007

People are not going to like a D or an F. It will be like being back inschool. Why don't they just refine the present system and still have the same grades in numbers.It will be more like an SAT score .

Gita, I wish I had a good answer for you but I don't. I guess that they probably feel that people will understand the school grade system better, and since they are planning on making a change they might as well try it.

JUL

2008

What is the highest score anyone has seen on the VantageScore?

MAY

Hi,

I went to purchase a FICO score but ended up getting a VantageScore? i did a little research but was wondering how to calculate that into a FICO score. My VantageScore was 914, any help calculating that to a FICO score.

great blogs by ALL.

Motown

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