Definition
VantageScore is a new credit risk scoring model created through a collaboration between the three main credit bureaus.
Analysis
VantageScore is a significant development, since it is the first major collaborative effort between the three main credit bureaus to create a unified scoring model. In other words, the formula for VantageScore is identical at Experian, Equifax and TransUnion.
Theoretically, it would produce the exact same score at all three credit bureaus. However, since the data reported to all three bureaus rarely is identical from one bureau to another, the scores will likely be somewhat different.
VantageScore was introduced in March 2006. Up until VantageScore, comparisons between credit bureaus were somewhat of an apples to oranges comparison. However, since VantageScore uses identical formulas, a more consistent comparison may be made.
The collaboration between the three main credit bureaus to create VantageScore is also significant since Fair Isaac was spurned from the process. The goal may have been to see if the bureaus could establish a marketable model without having to include Fair Isaac in the profits.
VantageScore is available to consumers as a product individually marketed by each of the three main credit bureaus. It has a score range from 501 and 990, with 990 signalling minimal default risk.
VantageScore is also available to lenders, although it is unclear if the lender version is identical to the consumer product. Based on all other risk scoring models in the marketplace, it is likely that the lender version is somewhat different.
VantageScore has not been widely accepted by lenders, which is crucial for its success. Most lenders utilize the classic FICO score, and some have begun utilizing the NextGen Score. The three main credit bureaus continue to market VantageScore to lenders and consumers alike.
