CandleFocus Glossary Editor
VantageScore is a consumer credit rating product, developed jointly by Equifax, TransUnion, and Experian, that generates a score between 300 and 850. This score is an alternative to the widely used FICO score created by the Fair Isaac Corporation. It is designed to give lenders valuable insights into a consumer’s creditworthiness, enabling them to make informed decisions about granting a loan.
At the heart of VantageScore is a “machine learning” system which mines the wealth of data collected by the three credit rating agencies mentioned above. It looks at factors such as the length of a person’s credit history, payment history, outstanding debt obligations, number of accounts, credit utilization, and types of credit being used. The system then outputs a score ranging from 300 to 850, with a higher score representing greater creditworthiness.
An important point to note is that VantageScore was designed with two key differences in mind. Firstly, the customer data required to generate a VantageScore score is much less stringent than that used by FICO, with some consumers that may not have enough data to generate a FICO score, still having a VantageScore. This has enabled lenders to assess more people on their creditworthiness. Secondly, VantageScore takes into account recent activity in order to create a more up-to-date rating. This means that if a consumer has a sudden drop in their financial situation, it won’t be accounted for until the subsequent VantageScore update.
To this point, VantageScore is a valuable alternative to the FICO score that enables lenders to assess more customers on their creditworthiness. With the help of “machine learning” and more up-to-date informaiton, VantageScore is a credit rating system that offers lenders valuable insights into a consumer’s financials.
At the heart of VantageScore is a “machine learning” system which mines the wealth of data collected by the three credit rating agencies mentioned above. It looks at factors such as the length of a person’s credit history, payment history, outstanding debt obligations, number of accounts, credit utilization, and types of credit being used. The system then outputs a score ranging from 300 to 850, with a higher score representing greater creditworthiness.
An important point to note is that VantageScore was designed with two key differences in mind. Firstly, the customer data required to generate a VantageScore score is much less stringent than that used by FICO, with some consumers that may not have enough data to generate a FICO score, still having a VantageScore. This has enabled lenders to assess more people on their creditworthiness. Secondly, VantageScore takes into account recent activity in order to create a more up-to-date rating. This means that if a consumer has a sudden drop in their financial situation, it won’t be accounted for until the subsequent VantageScore update.
To this point, VantageScore is a valuable alternative to the FICO score that enables lenders to assess more customers on their creditworthiness. With the help of “machine learning” and more up-to-date informaiton, VantageScore is a credit rating system that offers lenders valuable insights into a consumer’s financials.