What Is the VantageScore and How is it Different from the FICO Credit Score?

by Lynnette Khalfani-Cox, The Money Coach on December 1, 2010

in Credit Scores


Editor’s Note: We recently added a new article about the new VantageScore 3.0.


The VantageScore is a credit score jointly developed by the three credit bureaus. Originally launched in 2006, VantageScores at first weren’t being used by lenders. Amid the credit crunch, however, VantageScores have made headway in the financial world and now claim a six percent market share. That’s small compared to the widespread use of FICO credit scores. But it does illustrate that increasingly banks are starting to look at alternative credit scores – so perhaps you should too.


The Selling Points of VantageScores

Upon launching VantageScores in March 2006, the “Big Three” credit reporting companies – Equifax, Experian and TransUnion – promised that this new score would be more “accurate” than existing credit scores, and would also provide far less variance in credit scores among the credit bureaus. For instance, one big complaint from consumers over the years is that they might get one credit score from Equifax – say it’s 680, then another score of 710 from Experian, and a 740 score from TransUnion. With the VantageScore, consumers are supposed to benefit by getting scores that are much more similar because the three credit bureaus would all use the exact same methodology and coding to calculate credit scores. Additionally, the “Big Three” came up with a new numerical and grading system to classify a person’s credit, with credit scores ranging from 501 to 990 points. The breakdown for VantageScores looks like this:


Vantage Score        Grade        Risk Category
901 to 990        A        Super Prime
801 to 900        B        Prime Plus
701 to 800        C        Prime
601 to 700        D        Non-Prime
501 to 600        F        High Risk

Editor’s note: Vantagescore has changed their score range. Here’s a link to a conversion table provided by Vantagescore.


VantageScores Compete With FICO Scores and Legal Battle Erupts

Collaborating in this fashion to come up with the VantageScore raised many eyebrows. Some critics and consumer groups openly questioned whether or not these credit agencies were guilty of antitrust violations. Even though the credit bureaus each sold and marketed VantageScores on their own, consumer advocates didn’t like the fact that these business competitors had secretly teamed up to come up with a product together.


The U.S. Justice Department launched an informal inquiry into the matter; that inquiry into VantageScore was closed in February 2007 with no action being taken against the credit bureaus. But as of this writing, other legal wrangling is ongoing. Fair Isaac, the developer of the rival FICO credit score, filed a federal antitrust and trademark lawsuit against the three credit bureaus and VantageScore Solutions LLC in October 2006. (Equifax was later dropped from the lawsuit).


In any event, Fair Isaac lost that lawsuit in November 2009, when a federal jury ruled in favor of its competitors. Fair Isaac’s lawsuit had alleged trademark infringement, as well as unfair and anti-competitive practices. But the jury didn’t buy it, and neither did a U.S. District Judge, who had in July 2009 dismissed Fair Isaac’s antitrust, breach of contract and false advertising claims. As of this writing, Fair Isaac says it will appeal both decisions.


Some experts think that Fair Isaac losing its trademark lawsuit may open the door for VantageScores to become even more popular with banks and consumers. In an interview in 2009, Barrett Burns, the CEO of VantageScore Solutions LLC, told me: “We’re still working hard on adoption,” or getting banks to use the VantageScore model. Burns added that “the credit bureaus are responsible for all the sales activity” to the public. According to Burns, consumers can buy VantageScores from Experian and TransUnion, but not from Equifax, due to Equifax’s longstanding exclusive contract with Fair Isaac, creator of the FICO score.

How a VantageScore Differs From a FICO ScorePerfect Credit by Lynnette Khalfani-Cox 2


When asked what makes a VantageScore better or different from a FICO score, Burns ticked off a host of reasons. He said VantageScores are more predictive of risk because they look at more recent consumer behavior and utilize insights gleaned during the credit crunch, as opposed to FICO’s classic score model, which was based on older consumer data. Burns also asserted that VantageScores do a better job of scoring more people and capturing a broader array of payment information.


For instance, if a consumer has utility bill payments being tracked or reported anywhere, that payment history is taken into account, even though it’s not a traditional form of credit. “Those data sources are extremely predictive. So we will score that if it’s in a consumer file,” Burns said. The VantageScore methodology, Burns added, helps the “infrequent credit user, who tend to be the under-banked, the underserved, subprime, new credit users, and those with thin files.” Having a “thin file doesn’t necessarily equate to subprime,” Burns noted.


Additionally, “FICO doesn’t score in the first six months of credit usage,” Burns said. “We score as soon as a trade line comes into the credit bureau.” A trade line is simply an itemized listing or summary of a credit or financial account.


If you decide to get a VantageScore, or to learn more about this credit score through the credit bureaus, go to:



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