The Vantage credit score is a relatively new player in the world of credit scores and is also a world apart from the FICO score. Make sure you fully understand their similarities – and more importantly – their differences.
What is VantageScore?
Before there was VantageScore, there was FICO. Let’s talk about that first…
- In 1958 Fair Isaac Corp. created the first credit score model.
- In ’81 they created the first scoring models for credit agencies.
- In ’89 they launched the first FICO score for general-purpose.
- In a nutshell, FICO was first. It has been (and still is) the industry leader for credit scoring. It’s usually what lenders look at when they consider your credit application.
The three major credit reporting agencies – Experian, Equifax and TransUnion – have to pay Fair Isaac to license their proprietary FICO scoring algorithm. So the three of them banded together to create the Vantage credit score for their own use to save money. However FICO was and still is the gold standard for lending/credit decisions – purportedly with a near 90 percent marketshare.
But rather than pay $19.95 every single time you check it (which is what MyFICO charges) you can actually get regular free access to your FICO score with this new card:
If you have excellent credit, then consider this other card of theirs:
The three credit agencies hope their own credit score model, the VantageScore, will become a viable competitor.
- In March of 2006 the first version was launched. The VantageScore range at the time was 501 to 990 (versus FICO’s 300 to 850).
- In October 2010 the second version – 2.0 – was launched. It still ran on the same score range, but claimed to offer “improved predictive performance.”
- In 2013, the score switched to a 300-to-850 range with its 3.0 model to more closely follow FICO.
Who uses VantageScore?
This score hasn’t even been around a decade yet and thus far, lenders have failed to adapt it on a wide scale. To put things in perspective, according to FICO’s website, their scoring models are used by more than 90 percent of the largest lenders. So who is actually using VantageScore? That’s difficult to say.
In 2006 Fair Isaac Corporation filed a lawsuit against VantageScore Solutions, LLC alleging that they were trying to drive Fair Isaac out of the credit scoring industry. Within the 52-page court order, it claimed that VantageScore’s marketshare was only 5.7 percent.
In the years since VantageScore’s usage and market share has most certainly increased, but by how much is anyone’s guess. According to VantageScore’s website, the score is used by
- 7 of the Top 10 major financial institutions
- 8 of the Top 10 credit card issuers
- 6 of the Top 10 auto lenders
- 5 of the Top 5 mortgage lenders
The question is, however, how often are 7 of the Top 10 major financial institutions using VantageScore vs. FICO? I believe that would give us a clearer picture as to who uses Vantage credit scores.
VantageScore vs. FICO score?
Here’s are a couple things to consider when comparing these scores:
The formulas for both FICO and VantageScore are highly proprietary, so no one can tell you exactly how they are calculated. However, both companies do provide some basic information as to the general categories and how they affect your score. Here’s FICO’s breakdown:
VantageScore, meanwhile, doesn’t have an exact breakdown, but provides this approximation:
Extremely influential factors:
Highly influential factors:
-Age and type of credit
-Percentage of credit limit used
Moderately influential factors:
Less influential factors:
-Recent behavior and inquiries
For a more detailed explanation of this, check out my post about highest credit scores.
So how do you convert a score from one to the other?
Well as mentioned above, even though they’re quite similar, they don’t weigh things the same. For example, VantageScore seems to lump age of account history and credit mix into one “highly influential” category, while FICO divides them up into two less influential categories.
Therefore since these are two different algorithms, an accurate VantageScore to FICO (or vice versa) conversion is not truly possible!
When the VantageScore used its old 501-990 scale, some people recommended converting between them using an approximate, back of the envelope formula like so: multiply Vantage by 0.86 (since FICO’s top score of 850 was just about 86% of 990). Or to convert from FICO to Vantage, you multiply by 1.16 (which is 990 divided by 850). Yes, that might have given you a ballpark approximation, but more often than not, these formulas seemed to yield unreliable results.
Bottom line: Even though the score ranges have been made the same due to Vantage emulating FICO, you can’t draw neat or very accurate comparisons. We are talking about completely different credit scoring models, each weighing the various components in a different manner and each potentially including factors not even shared by the other model.
How important (or not) is your VantageScore to you?
The main reason to consider VantageScore is because it hasn’t been widely adopted by lenders. This is an example of the network effect and clearly since FICO has been around so long it enjoys the fruits of that phenomenon (kind of like how Facebook owns the social networking world despite the best efforts of Google Plus).
You can, however, get your VantageScore for free on some websites and it can certainly be a useful way to track your credit-building process over time and see how certain actions affect your credit. But, with several issuers like Discover Card, Barclaycard and American Express offering genuine FICO scores for free each month included on their billings statements it’s hardly worth going through the Karma exercise anymore in my opinion unless you don’t have or want one of these cards. In fact, the more issuers that jump on the FICO score sharing bandwagon fewer people will be willing to shell out their hard earned money to know that elusive number. And, that kind of seems like it could be an indicator that the Vantage Score is not going to ever be a serious challenger to FICO in the long run. With so many people checking their real FICO score information anything different will simply not receive any notice or have any value placed in it. This is especially true since American Express and Discover began offering free access to FICO scores each month for their cardmembers. Call it the network effect but once enough people (or banks) jump on the bandwagon I predict that’s what will happen.
Sites for free credit scores
|Comparing sites that offer free credit scores/reports|
|Free score types||Free credit report?||Frequency of score/report updates||Explanation of score factors||Free credit monitoring||Credit score prediction/simulator tool?|
|Credit Karma||VantageScore 3.0 from TransUnion and Equifax||YES. From TransUnion and Equifax||Every 7 days||YES||YES, via TransUnion||YES|
|Credit Sesame||VantageScore 3.0 from TransUnion.||NO. Can pay per viewing ($9.95 for TransUnion report) or via monthly subscription (starts at $7.95/month for monthly access to TransUnion, Equifax and Experian reports).||Monthly||YES||YES, via TransUnion||NO|
|Quizzle||VantageScore 3.0 from TransUnion.||YES. TransUnion report.||Every three months (every month for paid accounts)||YES||NO. Can pay for monitoring plan (starts at $8/month)||NO|
|My.CreditCards.com||VantageScore 3.0 from TransUnion||YES. TransUnion report.||Monthly||YES||YES, via TransUnion||NO|
|Credit.com||Vantage 3.0 from Experian; Experian National Equivalency Score||No. Must sign up for access to Experian report with Experian CreditWorks ($1 for 7-day trial, then $21.95/month)||Monthly||YES||NO. Requires paid plan.||NO|
|Mint.com||Equifax Credit Score (proprietary model used by Equifax)||NO. Can get Equifax credit report via Mint Credit Monitor ($16.99/month).||Quarterly score. Monthly for paid subscribers. Monthly credit report via Mint Credit Monitor (paid)||YES||NO. Three-bureau monitoring via Mint Credit Monitor.||NO|
|Wise Piggy||VantageScore 3.0 from TransUnion||NO. Provides “Account Summary”||Monthly||YES||NO||NO|
|Lending Tree||VantageScore 3.0 from TransUnion||NO||Monthly||YES||NO||NO|
|Capital One's CreditWise (for Capital One cardholders only)||VantageScore 3.0 from TransUnion||YES (TransUnion)||Every 7 days||YES|
|Discover's Scorecard||FICO score (Experian)||NO||Every 30 days||YES|
|Chase's Credit Journey||VantageScore 3.0 from TransUnion||NO||Weekly||YES|