Different Types of Scores

 

New Scores on the Block

Fair, Isaac has been successful in making FICO scores the dominant tool in credit scoring, and have made a nice business for themselves selling credit scores to lenders and now consumers alike. It's little wonder then that new competition has arrived on the scene.

Aside from selling their own flavors of FICO scores (like "Beacon" from Equifax or "Empirica" from TransUnion, produced by running their proprietary credit report data through a FICO model) the three major credit bureaus have banded together to produce a joint venture called VantageScore LLC, where they merge certain of their credit report data to produce what is called a "VantageScore".

VantageScores differ somewhat than FICO scores, most notably that they use both a letter grade (A-F, like a report card) as well as a numeric scale ranging from 501-990. Introduced in March 2006, it's too soon to tell how serious a competitor to FICO the VantageScore will be, but you should expect to hear more about it as time rolls forward.

What's in your Vantage Score?

According to VantageScore, LLC the breakout of your Vantage score is as follows:

  • 32% of the score is determined by payment histories on your credit accounts;
  • 23% is based upon the amount of total credit available in all your accounts which you are currently utilizing;
  • 15% is the portion of your score your outstanding balances contribute;
  • 13% is determined by the "depth of credit" in your profile (the kinds of credit you hold and how long you've held them);
  • 10% is calculated from the number of recent accounts you've opened, and how many credit inquiries have been generated from your search for those loans or lines of credit;
  • 7% is the weight applied to the total dollar amount of credit you could potentially utilize.

At the moment, it appears that the only way for you to directly have access your Vantage Score is through Experian, one of the three major credit bureaus. At this writing, there was no information about cost anywhere on the Experian VantageScore website.

In the Future...?

At one point, enough pressure built around credit scoring that regulators and even legislators got into the act. Way back in 2000, Congress had even been considering the "Fair Credit Full Disclosure Act" (H.R. 2856), sponsored by Rep. Chris Cannon (R-Utah) which mandated the release of your credit score to you. California actually passed a law which requires that scores be made available to borrowers there. It was that that kind of pressure led Fair, Isaac to begin a program to allow consumers to have access to their credit score, so the federal bill was ultimately dropped. Perhaps a future Congress will pick up the baton and allow you to have an occasional free access to your credit score. Until then, at least you can buy access to your score from Fair, Isaac at http://www.myfico.com/.

In the meantime, if you are applying for a mortgage, you can certainly ask what your credit score is. FICO has stated that it has no specific objection to providing you with the number as part of a financial transaction.

NextGen score

The NextGen Score is a scoring model designed for assessing consumer credit risk. It is similar to the traditional FICO scores with regard to intended use and general design. It has not enjoyed the same level of adoption as the traditional FICO score, but is used by some creditors. Other credit consumer scores are published by MyFICO.com and by Community Empower, as the CE Score.

VantageScore

In 2006, in attempting to make scoring consistent, the three major credit-reporting agencies introduced VantageScore. VantageScore uses a number range (501 to 990), which is different from FICO's, and assigns letter grades (A to F) to specific score ranges. A borrower's VantageScore may differ from agency to agency, but discrepancies stem from data differences in the reported credit information, not because of differences among credit-scoring mathematical models. Since FICO remains as the widely-used score by money lenders, the agencies continue offering FICO scores or similar.

Disclaimer: The information provided in this site is not legal advice. All information is general information, some of which pertains to legal issues involved in the subject matter. Credit Matters Inc. is not a law firm and is not a substitute for an attorney or law firm. Your access to and use of this site is subject to additional terms and conditions.

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