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Credit Rating Score Scale

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In March of 2006, the three credit bureaus announced the use of a new credit scoring system called VantageScore. It was to combat the industry giant Fair Isaac and their scoring model the FICO score. The VantageScore came out with a lot of hype, but that was mostly in the minds of the media and consumers not the creditors who will be granting credit.

One difference is the credit score scale. The FICO score uses a credit score scale that starts at 300 and goes to 850. The VantageScore uses a credit score scale that starts at 501 and goes to 990. The FICO scale is large with a range of 550 compare to the Vangtage range of 489. The credit bureaus also assigned a grade with their credit score scale.

?501- 600 F credit rating

?601 ? 700 D credit rating

?701 ? 800 C credit rating

?801 ? 900 B credit rating

?901 ? 990 A credit rating

Using this, the bureaus intentions were to assign you a grade. There is a limited amount of classes using the VantageSore credit chart. FICO scores have several different levels and further dissect the population when compare to the VantageScore.

Furthermore, there could be variations in your rating depending on which credit score scale is used. You might have a good credit rating with Fair Isaac, but a ?C? when using the VantageScore.

The differences carry into how the score are figured. With FICO score there are five different variables used to formulate your FICO score. With VanatageScore, there are six and the one not included in the FICO score is available credit. It is not a major factor in your FICO score, but a piece of the other five.

The two different credit score scales have most of the same methodology, but some things are different. It is hard to tell what carries more wait in different areas and is further hard to determine because both formulas are not released to the public.

The credit bureaus have their work cut out for them if they even want to take over even a small percentage of the credit scoring market. Fair Isaac has been in this business since the 1950's and is seen as the standard. Another factor to consider is the use of the FICO score in mortgages. Since this is the standard and mortgages are sold in bunches on a secondary market, it will be hard and a long fought battle to change to the VantageScore.

Credit Rating Score Scale

The first thing to know about the credit score scale is there are several ways to score your credit. This makes for a wide variety of possible outcomes. For example, scoring can vary between models such as FICO and Vantage. The credit score scale on these two models is different. With the FICO score scale starting at 300 and going to 850. The Vantage Score scale goes from 501 to 990.

The second thing to know about the credit score scale is the different formulas used. To once again compare the FICO score and the Vantage score, the math is different. Just one factor like payment history carries a weight of 35% in your FICO score. In the Vantage score, the same factor weighs in at 32% of the score.

The third thing to know about the credit score scale is the score will vary on the credit report used. That is why when you get scores from each credit bureau you will see different numbers. This is because of the fact your different accounts only have to report to one credit bureau. When you view your credit report you will see different things on each report. The fact that your credit score is based on your three different possible credit reports will give you three different credit scores. .

The last thing to know about the credit score scale is the credit model chosen by the majority of the mortgage lenders in the country. The FICO score is the one used. This has its roots in the expansion of consumer credit in the 1990's. Seeing the effectiveness and the speed to which credit scores granted credit to consumers, the two mortgage giants, Freddie Mac and Fannie Mae, recommended the use of the FICO score. Since these two corporations are responsible for over half of the mortgages in the country, lenders heeded their recommendation.

If you are going to get a loan, you should always start by finding out your credit score before hand. Get all three, this way you are not surprised by anything the lender is going to say about your score. Also, on things like auto loans and other consumer purchases you should ask what credit bureau the lender uses. This will better prepare you for the loan process. Furthermore, if you are going to apply for a mortgage, you need to know your FICO score.

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Kyle Gentile has sinced written about articles on various topics from Free Credit Report Score, Web Development and Debts Loans. To read more about , visit Kyle's website

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