TransUnion VantageScore Credit Score: NOT A FICO Score
- Credit Score:
Knowing the difference between VantageScore and FICO credit score will help you decide which score to purchase in order to determine your credit worthiness. VantageScore was developed jointly by the three credit reporting agencies to compete with FICO score, but it is not as widely used by creditors as FICO score.
Every January, May, and September is free credit report time for us and we have been getting one credit report for free every four months from one of the three credit bureaus for many years, well before the law that made everybody eligible for a free report every calendar year. On January 3, I requested our annual reports from TransUnion, but this time I also ordered an extra item, a credit score, a VantageScore credit score to be exact.
Though I have purchased FICO credit score several times in the past, I always buy it through myFICO (see how you get a FREE copy of FICO score and Equifax credit report) because FICO score is the standard that is widely used by lenders. Prior to January 3, I didn’t even know there exists a competitor called VantageScore, despite the *new* product has been around for more than a year Anyway, I didn’t cancel my order after being told that I will get VantageScore instead of FICO score. I wanted to see how the new score looks like. And here it is.
I was quite shocked to see my score at 916 because I usually get 700 something from FICO, then I realized that VantageScore uses a different score range than FICO’s which is normally between 300 and 850. If converted to the 300 to 850 range, my 916 score will be equivalent to 789, almost identical to the last FICO score I got in August. For VantageScore, whose score range is from 501 to 990, in addition to the score, it also assigns a grade:
- “A” credit: 901-990
- “B” credit: 801-900
- “C” credit: 701-800
- “D” credit: 601-700
- “F” credit: 501-600
Since this is the first time that I used VantageScore, I did a little research to get some background information on what exactly it is and how it is different from FICO score.
What Is VantageScore
According to Wikipedia, VantageScore was created by the three leading credit bureaus, Experian, Equifax, and TransUnion, to compete with FICO score, the dominant player in the credit score business. VantageScore was launched on March 16, 2006 and currently is offered by the three agencies. From VantageScore’s website, its features also include:
- Predicts the likelihood of future serious delinquencies (90 days late or greater) on any type of account;
- Consumer score is based primarily on a 24-month review of a consumer’s credit file;
- Includes up to four score factor codes and a fifth FACTA reason code;
- Can be accessed from all three CRCs;
- Does not consider “authorized-user” tradelines to assess credit risk.
The last feature, regarding authorized users, will actually be implemented in the latest update of FICO score formula.
Differences between VantageScore and FICO Score
As a competitor to FICO score, VantageScore promises to offer “a highly predictive score with a consistent interpretation of consumer credit files across all three major credit reporting companies.” In addition to the 501 to 990 score range and 5 credit grades, VantageScore also takes a different approach in calculating credit score. According an article on Bankrate.com, VantageScore considers six factors, one more than FICO score does:
From what I can see, VantageScore’s Utilization plus Balance is equivalent to FICO’s Amount owed and Types of credit uses, Depth of credit is similar to Length of credit history, and Recent credit is new credit. The only item that’s *new* is Available credit, but can’t it be part of Utilization?
Negative Factors in VantageScore
As part of the credit score, VantageScore also listed what it considered as negative factors of my credit score:
- The sum of your bank credit card account balances is too high: High credit balances may be considered by lenders to be a negative factor when determining creditworthiness. Paying down your balance may improve your score.
- The amount paid on your open real estate accounts is too low: Having little paid down on some accounts may be considered by lenders to be a negative factor when determining creditworthiness.
- Your average credit amount on open real estate accounts is too low: Having credit available to you is a sign that you are able to manage your finances responsibly. Lenders usually like to see that consumers have a large amount of credit available to them.
- The balances on your open accounts are too high in comparison to their credit limits: It is a good idea to use your accounts regularly, but remember to keep your balances low in comparison to your available credit limits. Having a high ratio of balances to credit limits on open accounts may be viewed negatively by lenders.
They are quite different from those negative factors on FICO credit score reports, especially the two items related to “real estate account.” Honestly, I don’t really understand what “average credit amount on open real estate accounts” really means. If I am 5 years into a 30-year mortgage, the credit amount could still be low compared to the loan amount, though I have made on-time monthly payment from day one. Does that mean I am less “able to manage your finances responsibly”? I don’t think so!
Overall, after comparing VantageScore with FICO score, I feel that I still prefer to get a FICO score to evaluate my own credit worthiness. Even though VantageScore makes a good alternative to FICO score as a competitor, FICO score seems to be more accurate in describing the real credit situation.
- Free trial
- editor rating5
This article was originally written or modified on . If you enjoyed reading this post, please consider subscribing to my full RSS feed. Or you can also choose to have free daily updates delivered right to your inbox.