VantageScore and consumers
VantageScore is a new scoring model that credit bureaus are going to market this year, perhaps. The question is why VantageScore, why not FICO or NewGen FICO? I’m sure all of us have noticed the difference among the credit scores obtained from the three bureaus. This happens because each bureau uses different formula while calculating credit score. Bureaus anticipate that VantageScore will eliminate this difference by bringing in a sole scoring model.
VantageScore would be simple to understand and interpret too. Consumers can predict well in advance how certain financial activities will affect the score. It will be represented as Grades. If your score is in 900s, you will get A Grade, if it is in 800s you will get B Grade and so on.
The main problem with VantageScore is lenders, mortgage brokers, auto mobile dealers, banks – all have to change their system to adjust with this new model. So this is a huge process and the industry might not be willing to adopt this change. Now if your lender is not going to concentrate on your VantageScore, why would you buy this score?
Industry is saying that few lenders have shown interest towards this change, but there is no clue at all if the finance industry would accept VantageScore as the yard stick of consumers’ financial status or not.
Moreover, people are of opinion that VantageScore still depends on various factors on credit report. As all the creditors do not report to all the three bureaus, the chance of getting different score or Grade is still there; then what is the utility of a new model at this stage?
Source: ConsumerReports.org