VantageScore Credit Rating: Difference with FICO Credit Score

What is VantageScore credit rating score

vantagescore-credit-rating

Most of the lenders take the services of credit rating agencies while evaluating the application of a loan seeker. In US, FICO credit score is often understood to be the de facto standard for the credit rating. But FICO is not the only credit score used by lenders. There are many other credit rating scores used by many other lenders. One of them is VantageScore which was launched by three major credit bureaus – Equifax, Experian and TransUnion. Just like FICO score VantageScore credit rating also attempts to help the lenders judge the trustworthiness of the borrowing application.

VantageScore versus FICO credit score

On this blog we have already carried a blog post which gives details about the FICO credit score. Unlike FICO credit score, VantageScore ratings range from 501 to 990, higher being a better credit score. Depending upon the total marks obtained on the credit score, VantageScore assigns a letter grade from A – F. The grade A is considered as the best grade while grade F is considered to be the worst with highest risk involved. As per the data released by Experian, the average man or calculated as the 736 which is equivalent to letter C grade.

Although VantageScore and FICO credit scores use different methodology for calculation but as a rough approximation if you multiply your VantageScore by 0.86 you can get an approximation for fico score.

How VantageScore is calculated

The VantageScore credit rating is based on variables as given below.

  1. Payment history
  2. Utilisation
  3. Balances
  4. Depth Of credit
  5. Recent credit
  6. Available credit

Although the VantageScore credit rating depends on all the above parameters, but it is to be understood that VantageScore rating is based primarily on the last 24 months of action on consumer’s actions. It is often claimed the advantages for in chalk out the credit rating of thing by consumers more accurately by providing predicative scores for consumers limited histories. In other words VantageScore sometimes give better results to consumers who may have prior negative action against them but have a good recent credit history.

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Disclaimer

Lots of approximations and assumptions have been made while developing the calculators.

Please make your own calculations before making any financial decision.