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Everyone is pretty familiar with what a FICO credit score is. But there’s a new credit scoring agency in town, and in the next few years it may replace the FICO score all together.
What most people don’t understand is that there are many agencies who produce credit scores. FICO is just the most popular one used. But in the past several years, lenders have been using a consumer’s VantageScore to determine credit worthiness.
VantageScore is a relatively new credit scoring agency designed to give more choice in the marketplace. VantageScore is growing in popularity mainly due to its simplified scoring method.
For consumers with weak credit history, this may be a good thing. This company looks back at the past 24 months of a person’s credit history, while FICO may go back decades. This is useful for a borrower who may have had derogatory marks made years ago. This is also perfect for someone who is just establishing credit for the first time.
Keep in mind that Vantage scores won’t wipe away a track record of bad credit. You still have to prove you’re financially responsible. The goal here is to level out the playing field more in the favor of borrowers.