Friday, 3 January 2014

What Is The Vantage Score and Its Minimum Scoring Criteria?

Vantage scores are the new method of calculating credit scores that are offered by all the three major credit reference agencies (CRA) i.e. TransUnion, Experian and Equifax. This effective credit rating product has been introduced by the 3 CRA’s on 14 March, 2006. This new credit scoring system helps you to understand your credit report as easy as your high school report card.

This credit scoring model has been established and funded as a joint project between the three credit bureaus. This is the first ever same model that all the three credit agencies are using. Each of the three CRA is using the same method to calculate the scores. Thus, the variance in the scores will be only due to the different date being collected by the agencies.

The vantage scoring model is quite an effective method to analyze the credit report. Unlike the FICO scores which usually count ranges from 300 to 850, vantage scores will be ranging from 501 to 990 and affix the letter grade to its ranging from “A” to “F”. The higher vantage scores mean an individual is more creditworthy. The range of vantage scores and its grading system are as follows:

901 to 990 indicate “A” Grade

801 to 900 indicate “B” Grade

701 to 800 indicate “C” Grade

601 to 700 indicate “D” Grade

501 to 600 indicate “F” Grade

Vantage scores have been used by many of the top lenders, banking institutions, credit unions, mortgage companies and so on. Vantage score 3.0 models provide analytical and consistent credit scoring to the lenders and the consumers. It has been announced that from 2013, vantage scores will be ranging from 300 to 850 in which the higher the rates, the lower will be the risk.

How the vantage score is calculated?

Like FICO scores, Vantage scores are also a quantified model which uses a numerical range of its scores giving the letter Grade along with it. Some of the categories have been used to calculate the vantage scores.  Positive in each proportion will constitute good credit.

1. 28 percent of the scoring criteria depend upon the payment history which means how timely and consistent a customer is in paying back the loan.

2. 23 percent of the scoring criteria depend upon the credit utilization. It means how much credit is available to the customer. It basically signifies the debt to credit ratio.

3. 9 percent of credit scoring based on the credit balances of the customer which means the total debt you owe. The current debt is less harsh than delinquent debt.

4. 9 percent of your credit count shows the debt on your credit which means the length and type of credit you have received.

5. 30 percent indicated the recent credit in your credit scores. It shows how many hard inquiries you have made and the new accounts you currently have.

6. 1 percent of credit count shows the available credit. It means the current credit worthiness of the customer.

Minimum scoring criteria for Vantage score 3.0

Vantage scores 3.0 have the minimum scoring criteria. It should be one qualified trade on file and the customer should not be reported as deceased. This could be calculated for the people who have a deceased status and do not have any credit file information expect an enquiry. @ http://www.smallloansnocreditcheck.com.au