VantageScore is a consumer credit rating model, created through the combined efforts of three major credit bureaus (Equifax, Experian, and TransUnion). This model is managed and managed by an independent company, VantageScore Solutions, LLC, formed in 2006 and jointly owned by three bureaus.
The VantageScore model competes with the credit rating model produced by Fair Isaac Corp FICO. Like the model developed by FICO, the VantageScore model operates on data stored in consumer credit files managed by three national credit bureaus. The VantageScore model and the FICO model use statistical analyzes on the data to predict the likelihood that consumers will fail in the loan. The VantageScore and FICO models represent the risk of loan defaults in the form of a three-digit score, with a higher score indicating a lower risk. VantageScore and FICO use different analytical methods of ownership, and scores from one system can not be translated into one from the other.
Video VantageScore
VantageScore vs skor FICO
VantageScore and FICO are developers of a competitive credit rating model. FICO, the original creator of the FICO Score, was not involved with the creation of the VantageScore formula.
VantageScore, FICO, and credit bureaus have allowed the public to know some information about credit score categories and related calculation weights. FICO allows consumers to get generic or classic FICO scores for Experian, TransUnion, and Equifax from the myFICO website. Consumers can get their VantageScores from a free credit report website, and TransUnion and Experian offer VantageScores to consumers for a fee through their website.
Unlike the FICO credit rating model, tailored to each of the three national credit bureaus, to accommodate structural differences in the bureaus database, the VantageScore model design allows one model to operate on all three bureaus. VantageScore Solutions holds several patents on the process ensuring that the pieces of data in the consumer database of the bureau will be treated identically, regardless of the differences in the database structure. These methods eliminate many, but not all, differences in VantageScore scores obtained at the same time from different credit bureaus. Some variations can not be avoided because factors such as the timing of the lender's payment information report can mean the contents of a given consumer credit file will differ slightly on each of the three credit bureaus.
The first two VantageScore models (VantageScore 1.0, released in 2006, and VantageScore 2.0, released in 2010) use the 501 to 990 scale range, and the font values ​​assigned to different bands within that range, according to TransUnion:
- A: 900-990
- B: 800-899
- C: 700-799
- D: 600-699
- F: 501-599
VantageScore 3.0, a model version released in 2013, adopts a scale of 300 to 850. VantageScore associates changes, which match the range of scales used by the FICO model, with the fact that consumers are more familiar with it than the original VantageScore range, and because the 300- 850 will make it easier for lenders to incorporate VantageScore into automated systems.
VantageScore 4.0 was released in mid-2017, and contains many updates from 3.0. For example, version 4 medical weights reported "in the collection" are lighter than non-medical collection accounts. Any type of paid billing account is not taken into account in the scores; this is a major difference from FICO, as most FICO versions count each billing account into scores, paid or unpaid. VantageScore 4.0 also looks at the trending data provided by the credit bureaus from which the scores are calculated, and checks the level of consumer credit usage over time. This is a major development in credit scores as other models to date (including older versions of VantageScore and all existing FICO versions) only check for the most recently reported billing cycle. So, for example, if a consumer credit card often reports on or near a credit line, but consumers pay their balance recently and now reflect a $ 0 balance, most credit scores will only see the current $ 0 balance when calculating tariff utilization. However, the VantageScore 4.0 maker believes it is more accurate to see the level of consumer utilization over a period of time. This can help or hurt consumers, depending on their situation. A consumer who historically uses very little of their credit but makes a one-time purchase and shows a high balance when the score is calculated will score better under VantageScore 4.0 than, say, FICO 8, which sees only the most billing cycle information currently.
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See also
- Credit score
- Credit score in the United States
- Credit bureau
- Alternate data
- Equifax
- TransUnion
- Experian
- Comparison of free credit report websites
References
External links
- The Official VantageScore Website
Source of the article : Wikipedia