VantageScore 3.0 (new way to calculate credit scores)

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VantageScore 3.0 (new way to calculate credit scores)

Postby retiredjg » Tue Mar 12, 2013 10:31 am

Of interest to people who are watching their credit scores.

http://money.cnn.com/2013/03/11/pf/cred ... t=My+Yahoo


Not the main emphasis of the article, but something I like a lot:

    "Meanwhile, VantageScore is changing its scoring range to align with FICO's 300 to 850 range. Earlier versions range from 501 to 990, often causing confusion for consumers and lenders since most are more familiar with FICO's range."
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Re: VantageScore 3.0 (new way to calculate credit scores)

Postby nisiprius » Tue Mar 12, 2013 8:03 pm

And are these scores actually good for anything, i.e. do they actually count when you need to get a loan? Or are they just an unofficial guesstimate of your FICO score?
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Re: VantageScore 3.0 (new way to calculate credit scores)

Postby grabiner » Tue Mar 12, 2013 8:05 pm

retiredjg wrote:Not the main emphasis of the article, but something I like a lot:

    "Meanwhile, VantageScore is changing its scoring range to align with FICO's 300 to 850 range. Earlier versions range from 501 to 990, often causing confusion for consumers and lenders since most are more familiar with FICO's range."


This misses the main point; even if the range is the same, the distribution may not be. Several posters have been concerned about a 700 TransRisk score from Credit Karma, which is the top 39%, and is thus about as good as a 750 FICO. Quizzle's CE score is even lower but also on the same range.

And given this conversion table, it appears that the VantageScore 3.0 will be lower than the FICO score as well. A 750 VantageScore 2.0 (the median on the old scale) corresponds to a 672 VantageScore 3.0, while the FICO median is around 720.
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Re: VantageScore 3.0 (new way to calculate credit scores)

Postby nisiprius » Tue Mar 12, 2013 8:19 pm

grabiner wrote:This misses the main point; even if the range is the same, the distribution may not be.
Idiots.

Even if you assume that they don't know what the distribution of FICO scores is--highly unlikely, how much would it cost them to buy a FICO score on a thousand Experian employees as industrial espionage?--how could they possibly have produced three revisions of their own score with different ranges and distribution?

They're not up to 1940s-level educational and psychological testing methodology?

Not one of them ever had a teacher who graded on a curve?
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Re: VantageScore 3.0 (new way to calculate credit scores)

Postby grabiner » Tue Mar 12, 2013 9:20 pm

nisiprius wrote:
grabiner wrote:This misses the main point; even if the range is the same, the distribution may not be.
Idiots.

Even if you assume that they don't know what the distribution of FICO scores is--highly unlikely,


Googling for "FICO score distribution" will give lots of links to the charts. Here, for example, is a link to a table which comes from FICO and is posted on creditcards.com:

http://blogs.creditcards.com/2011/09/ec ... scores.php

This chart confirms that 53.4%-54.4% of FICO scores were 700 or higher every year from 2005 to 2011, indicating a median around 715, compared to VantageScore's 672. (VantageScore's median may be slightly lower because it can score more people, but it shouldn't be this large a difference.)
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Re: VantageScore 3.0 (new way to calculate credit scores)

Postby retiredjg » Wed Mar 13, 2013 9:48 am

nisiprius wrote:And are these scores actually good for anything, i.e. do they actually count when you need to get a loan? Or are they just an unofficial guesstimate of your FICO score?

I don't know, but he article says:

    "But the boost only matters if a lender uses the new VantageScore. While FICO is still the most widely used scoring model, the VantageScore is gaining ground. It's currently used by seven of the top 10 financial institutions, six of the top 10 credit card issuers and four of the leading auto lenders and mortgage lenders, according to its website."
Sounds like they might be tooting their own horn a bit. Seems to me that being "used" by an institution might not mean which score the institution uses for most of its business and that FICO may still be the score to know.


grabiner wrote:This misses the main point; even if the range is the same, the distribution may not be.

Since this new VantageScore 3.0 is supposed to include millions of people excluded by FICO, I would assume the distribution might actually be different. What I hope is that a 750 at Fico might mean about the same thing as a 750 at VantageScore 3.0. Maybe I'm being naive. :happy
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Re: VantageScore 3.0 (new way to calculate credit scores)

Postby nisiprius » Sun Mar 24, 2013 4:22 pm

It appears that almost nobody actually uses it. According to an article in Time Magazine, Do we really need another credit score? Maybe:
All of this is promising, but none of these advances matter unless lenders actually use the new score. VantageScore says four of the top five mortgage lenders and six of the top 10 credit-card issuers use its score in at least some capacity, but won’t say how widely it’s used across the lending industry as a whole. It’s safe to assume that it’s much less than top competitor FICO, though. Craig Focardi, senior research director of retail banking cards at research and consulting firm CEB TowerGroup, estimates that VantageScore makes up less than 10% of the credit scoring market.
Hmmm... what's this other link?

Kowabunga, this is worth starting a new thread for: "Think You Just Bought Your Real Credit Score? Think Again"
Last edited by nisiprius on Sun Mar 24, 2013 5:13 pm, edited 1 time in total.
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Re: VantageScore 3.0 (new way to calculate credit scores)

Postby retiredjg » Sun Mar 24, 2013 4:53 pm

nisiprius wrote:It appears that almost nobody actually uses it.

Agreed. I don't think it will beat out FICO any time soon. I was hoping that the new method might make the two scores more comparable. We'll see.
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Re: VantageScore 3.0 (new way to calculate credit scores)

Postby Mudpuppy » Sun Mar 24, 2013 4:56 pm

retiredjg wrote:
nisiprius wrote:It appears that almost nobody actually uses it.

Agreed. I don't think it will beat out FICO any time soon. I was hoping that the new method might make the two scores more comparable. We'll see.

Call me cynical, but I think they want less savvy consumers to think the two scores are comparable (by having them on the same scale), even if they are not comparable and relatively few creditors use the VantageScore, so that sales of score reports increase.
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