Looks good for those with collection debts and those with a lack of credit historty. They are also re-scaling their score range to match FICO exactly and will now be 300-850 instead of 501-990
Very interesting about the matching the scale for FICO scores. Is this competition or are they simply trying to reduce the confusion between the two scores? I wonder how close the two scores will be for the average Joe?
They are advertising that this score is now being used by 7 of the top 10 banks.
But also do not mention for what purpose they are using this score.
It doesnt seem to make any sense if they are going to exclude negative information that the score would play any real factor in a decision process. But what the heck do I know!
I too was shocked to hear 7/10 use Vantage...I wonder for what products. I bet mortgages are not one of them.
Regardless, its a good move to cut down on the confusion of the scores but people will still need to realize the %'s and computations are different.
The bigger picture in this NEW Vantage Score has been missed ... bottom line, this is Credit Scoring on the Curve to help those people who have bad credit. The Credit Score system has been socialized through an effort (successful it seems) by politicians to cast the existing FICO model as corrupt and unfair and biased against minorities. The three credit agencies have just caved and from here on out more and more money will be directed to people with lousy credit from past poor performance. It's all connected to the Consumer Financial Protection Bureau which came into existence under Dodd-Frank. The CFPB has said the three agencies need to "reform", that's code for giving more money to people who don't/won't pay money back. So past collections on bad debt will no longer count, or delinquencies or defaults related to natural disasters. So now they will use things like rent and utility bills for scoring which will give many people (many immigrants) a way to get a credit score which will allow them to get credit cards and home loans. Bingo, here we go again. Hold on to your wallets because the responsible users of credit will end up paying for all of this through higher interest rates and fees. It's a political decision and the three agencies have caved. The credit scoring system will be less and less useful to indicate credit worthiness. Another good free market enterprise that has underpinned credit issuance has been greatly weakend by politicians who have other goals in mind. Too bad.
FICO '08 ignores a collection underneath I think it's either $50 or $100 on a credit report. Granted it's not used for mortgages; however, it's used for other things absolutely.
I think the Vantage profile just takes the anti-nuisance collection step a bit further. If I were designing a system in the current era, I'd certainly give something for people who got righteous on their past debts. Between the misreporting and sometimes frankly pretty spurious collections, I think that the stance isn't a poor one.
Every single underwriter I've talked to:
- Open collection: "Oh I just shake my head when I see one of those, seriously go get that fixed"
- Paid collection: "Oh you have a collection, but it's paid, that's good"
If credit analysts and underwiters are doing that anyway when making decisions, why not simply codify it into the algorithm directly?
That said, I don't see Vantage gaining significant traction as a result of this change. If the GSE's adopt it, that's one thing, but beyond that, *shrug*.
Can't really find any articles stating when the 3 bureau's would switch over to 3.0.. Anyone know that answer?