Your VantageScore

By: Timothy McFarlin | Published: October 13th, 2011 | Category: Bankruptcy

In 2006, the three credit bureaus (Experian, TransUnion, and Equifax) came together to find a way to create a uniform scoring method that would be easily understood. The result was the VantageScore. Many people know what their credit score is, but they do not know what kind of creditworthiness bracket it places them in. With the VantageScore, the gradation is an A-F scale just like in school, making it comprehensible to everyone.

What is a VantageScore?

The VantageScore is an overall credit score. Your credit standing will vary depending on the scoring system used by your particular lender. With the VantageScore if you have a “good” score with one lender, you will retain that same “good” score with another. This is because the VantageScore is used as a “risk score,” which is a key component that lenders use to determine your creditworthiness. The VantageScore is the most consistent score because it uses one model with one set of scoring calculations. This makes for scores that are uniform and consistent.

Why is Your VantageScore Important?

Your personal credit score is important when you are looking to take out a loan, buy a home, or before your apply for any credit in general. With the VantageScore you will be able to see exactly what kind of terms you are likely to get on a loan, what kind of interest rates, and how much credit you are eligible to receive based on your score.

How is VantageScore Determined?

The developers of credit scoring models review a set of consumers, usually more than 1 million, and they look at these consumers credit profiles. The historical credit profiles are closely examined to identify common variables.

This information is then used to build statistical models by selecting the credit variables that are the most predictive of future behavior and assigning appropriate weights to each variable.

The score is influenced by several factors:

Understanding VantageScore

TheVantageScore is measured in a numeric range, from 501 to 990. This number then places you in a certain bracket A-F to determine your creditworthiness.

A- Consumers in this group have credit scores that rank higher than 84% of US consumers. Most lenders will provide the best credit terms to these people.

B- Consumers in this group have credit scores that rank higher than 59% of US consumers. Most lenders will provide good credit terms to these people.

C- Consumers in this group have credit scores that rank higher than 39% of US consumers. Most lenders will provide reasonable credit terms to these people. Some lenders may take a more in-depth look at this consumer’s credit report and require further documentation to improve the credit term.

D- Consumers in this group have credit scores that rank higher than 19% of US consumers. Lenders typically view these consumers as “higher risk.” Some lenders will provide credit for people in this group but the credit terms will be relatively unfavorable, and interest rates will be substantially higher.

F- Consumers in this group have credit scores that rank in the lowest 19% of US consumers. Most lenders view this group as very high risk and will generally not extend them any credit.

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