VantageScore

A New Alternative to the FICO Score

In recent times, an alternative system of rating a person‘s credit history has been in development and is now in somewhat limited use. This new system is called VantageScore. The three major credit bureaus have been involved in the development of this new system -- and are likely to make significant use of the news system into the future.

The new system does rely on numerical data to develop a credit rating for a consumer. The scores go from 501 to 990. However, under this new system, the raw numerical is transformed into a letter grade -- precisely like the letter grades used in an academic setting. Consumers, under the VantageScore protocol, will be given a letter grade in regard to their credit histories of A, B, C, D, or F.

How VantageScore can be Used

VantageScore also offers creditors more discretion in determining their limits of trust. For instance, just as in some schools an A is considered a 90 but other schools demand a 93, some creditors may accept the A credit score at 901 and above yet others will reserve this grade for 930 and above. This flexibility will help lenders provide loans to people who would not normally be able to get them, and give others more power to control their risk.