What Is VantageScore?
If you take an interest in looking after your credit rating you may well have heard about how the 3 main credit reference agencies have decided to work together to come up with a method of credit scoring that uses the same exact formula across all three companies.
Up until recently the big 3 credit reporting agencies, Equifax, Experian and Trans Union had each been using their own methods of scoring the credit history of individual borrowers. But in a move designed to make life easier for all concerned they decided to work co-operatively on developing a common system and that system is called VantageScore (sometimes mistakenly called Vantage Score).
The idea behind this new way of credit scoring is that each company will give the same values to the same areas of scoring to produce a common result. This result will then be expressed as a letter which corresponds to a category of borrower based on the academic scale of A, B, C, D, F.
The different categories together with their scoring ranges are as follows:
Super Prime – these are the customers who score between 901 and 990. They make up the very top eleven percent of borrowers. They are regarded as very low risk and will almost always get the very best terms and interest rates.
Plus Prime – customers who score between 801 and 900 make up this second tier of borrowers. They are within the top 40% of the population and will get what are generally classed as “good” rates and may be offered even better terms by individual lenders.
Prime – scoring between 701 and 800 are the primes. They are generally considered trustworthy and will not have problems obtaining credit. However to get better terms some lenders may wish to review their credit history and ask for additional documentation.
Non-Prime – scoring 601 to 700 this group makes up the bottom 38% of the marketplace and are generally considered higher risk clients. They may well get credit but it will be less likely that they are offered favourable rates to try to offset the higher levels of defaulting in this grouping.
High Risk – with a score of 501 to 600 the high risk category are likely to have difficulty obtaining credit from many lenders while others will require deposit accounts to protect the loans. Any loans made will be at a much higher rate to reflect the risks involved in lending to this group of borrowers.
The credit reporting agencies believe that by having just this one method of credit scoring it will encourage more loan approvals while at the same time reducing lending risk. They hope that it will open the door to easier credit for some people, such as immigrants and young people, who in the past were unable to qualify because they little or no credit history for other scoring methods to evaluate.
If you take an interest in looking after your credit rating you may well have heard about how the 3 main credit reference agencies have decided to work together to come up with a method of credit scoring that uses the same exact formula across all three companies.
Up until recently the big 3 credit reporting agencies, Equifax, Experian and Trans Union had each been using their own methods of scoring the credit history of individual borrowers.
But in a move designed to make life easier for all concerned they decided to work co-operatively on developing a common system and that system is called VantageScore (sometimes mistakenly called Vantage Score).
The idea behind this new way of credit scoring is that each company will give the same values to the same areas of scoring to produce a common result. This result will then be expressed as a letter which corresponds to a category of borrower based on the academic scale of A, B, C, D, F.
The different categories together with their scoring ranges are as follows:
Super Prime – these are the customers who score between 901 and 990. They make up the very top eleven percent of borrowers. They are regarded as very low risk and will almost always get the very best terms and interest rates.
Plus Prime – customers who score between 801 and 900 make up this second tier of borrowers. They are within the top 40% of the population and will get what are generally classed as “good” rates and may be offered even better terms by individual lenders.
Prime – scoring between 701 and 800 are the primes. They are generally considered trustworthy and will not have problems obtaining credit. However to get better terms some lenders may wish to review their credit history and ask for additional documentation.
Non-Prime – scoring 601 to 700 this group makes up the bottom 38% of the marketplace and are generally considered higher risk clients. They may well get credit but it will be less likely that they are offered favourable rates to try to offset the higher levels of defaulting in this grouping.
High Risk – with a score of 501 to 600 the high risk category are likely to have difficulty obtaining credit from many lenders while others will require deposit accounts to protect the loans. Any loans made will be at a much higher rate to reflect the risks involved in lending to this group of borrowers.
The credit reporting agencies believe that by having just this one method of credit scoring it will encourage more loan approvals while at the same time reducing lending risk.
They hope that it will open the door to easier credit for some people, such as immigrants and young people, who in the past were unable to qualify because they little or no credit history for other scoring methods to evaluate.
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