Credit score scale: FICO score versus VantageScore

In March 2006, all three credit bureaus announced the use of a new credit rating system called VantageScore. It was to combat the industry giant Fair Isaac and its scoring model, the FICO score. The VantageScore came out with a lot of publicity, but that was primarily on the minds of the media and consumers, not the creditors who will be granting the credit.

One difference is the credit score scale. The FICO score uses a credit score scale that starts at 300 and goes to 850. The VantageScore uses a credit score scale that starts at 501 and goes to 990. The FICO scale is large with a range of 550 compared to Vangtage’s rank of 489 The credit bureaus also assigned a rating with their credit score scale.

501-600 F Credit Rating

Credit rating of 601 – 700 D

Credit rating of 701 – 800 C

Credit rating 801 – 900 B

901 – 990 A credit rating

Using this, the office’s intentions were to assign you a grade. There are a limited number of classes that use the VantageSore credit table. FICO scores have several different levels and further analyze the population compared to the VantageScore.

Also, there could be variations in your rating depending on the credit rating scale used. You may have a good credit rating with Fair Isaac, but a “C” when using VantageScore.

The differences influence how the score is calculated. With the FICO score there are five different variables that are used to formulate your FICO score. With VanatageScore, there are six and the one that is not included in the FICO score is available credit. It is not a major factor in your FICO score, but a part of the other five.

The two different credit score scales have most of the same methodology, but some things are different. It is difficult to say what leads to more waiting in different areas and it is more difficult to determine because both formulas are not disclosed to the public.

Credit bureaus have a lot of work ahead of them if they want to take over even a small percentage of the credit rating market. Fair Isaac has been in this business since the 1950s and is seen as the standard. Another factor to consider is the use of the FICO Score on mortgages. Since this is the standard and mortgages are sold in bundles in a secondary market, it will be difficult and a long battle to switch to the VantageScore.