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VantageScore® - Consistency in Credit Scoring

VantageScore Credit Score by TransUnion is a credit score that was developed by the three major credit reporting companies to provide more consistency and predictability in credit scoring, and to score a larger population of consumers than was previously available. This allows "thin file" consumers – those with little or no credit history – to receive a score.

Your VantageScore is a three-digit number ranging from 501-990. Lenders and other institutions may use a VantageScore, along with other information about you – such as income, down payments and employment status – to determine if you qualify for credit and the terms of credit, which can impact the amount you pay in interest and finance charges. Consumers with a higher VantageScore indicate a lower likelihood of risk to lenders. Those with higher scores generally are able to acquire credit at more competitive rates than those with lower scores.

A familiar academic letter grade scale is applied to your VantageScore. That standard has five tiers:
  • "A" for scores between 900-990
  • "B" for scores between 800-899
  • "C" for scores between 700-799
  • "D" for scores between 600-699
  • "F" for scores 599 and below
Those that fall into the "A" category are considered the least risky from a lender's perspective.

What is in a VantageScore?

VantageScore is based primarily on a 24-month review of your credit report. Your credit report has information – such as your history of payment punctuality, the total amount of your available credit, the total amount and type of debt you have, the number of open and active accounts, and the longevity of your relationships with creditors.

Your VantageScore is compiled using the following characteristics:
  • Payment history – Have you consistently paid your accounts in a timely manner?
  • Utilization – How much of your total credit available are currently using?
  • Balances – What is the total of your current and delinquent account balances?
  • Depth of credit – How long is your credit history and is there a varied mix of credit types?
  • Recent credit – How many recently opened credit accounts and credit inquiries do you have?
  • Available credit – What is the total amount of credit that you currently have access to?
VantageScore

What isn’t included in your VantageScore?

There are many misconceptions about credit scores. It’s important to understand what information VantageScore, or any credit scores, does NOT use. VantageScore does not consider:
  • Race
  • Color
  • Religion
  • Nationality
  • Sex
  • Marital status
  • Age
  • Salary, occupation, title, employer, employment history
  • Where you live

What is VantageScore used for?

Banks, credit card companies, and other lenders use credit scores, including VantageScore, to assess a borrower's loan eligibility and to set loan/credit terms. They normally use credit scores in addition to a variety of other information, such as income, down payments, and employment status. The process of a lender assessing risk is called "underwriting."

Credit scores are also frequently used by other entities, like insurance carriers, to help predict losses in order to accurately price home and auto policies. This means that a consumer with a good score would be more likely to pay a lower policy rate and not have to subsidize the cost for higher risk policyholders.

Additionally, landlords may use credit scores to determine whether they want to enter into an agreement with a consumer and how much of a deposit they will require. The better a credit score, the more likely consumers will receive favorable terms.

Lenders typically generate their own customized credit scores or obtain credit scores from TransUnion and/or one of the other two credit reporting companies. The credit reporting company generates a score based on the credit report data that it has compiled over time from creditors and lenders with whom the consumer has relationships (your banks, credit card companies, retailers, auto finance companies, etc.).

A great advantage of using credit scores is that lenders can make decisions more quickly and consistently than they could if they studied every consumer’s credit report manually. The use of credit scores has also greatly reduced problems associated with discrimination and human error.
Now that you know more about VantageScore credit scores,
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