What you need to know about VantageScore 3.0?

Everyone is wondering how the new credit score is different from the old one. The new credit score named VantageScore 3.0 is somewhat an upgraded version of the original VantageScore. The old one is composed of a generic credit scoring model which has been used by credit agencies and bureaus since 2006 while the new one is a model created as a joint effort by the three major credit bureaus namely Experian, Equifax and TransUnion with the hope of acquiring more potential customers. This new model is good news to millions of consumers out there especially to those who are looking for ways to improve their credit. Aside from that the new model now caters to address other payment patterns to better establish and evaluate consumers. Listed below are the facts that you need to know about the credit score—VantageScore 3.0.

1. It deletes debt collection accounts that have already been paid off- VantageScorewill not represent any debt collection accounts that have already been paid in full. Other credit scoring models such as FICO records all accounts despite being paid in full. To some, having these accounts is a negative thing because it records all the history bad or good. If a consumer had a rough time paying these accounts, it will reflect on his or her score and might give him or her a hard time to improve on his or her score. On the other hand, VantageScore, instead of recording these accounts, it will wipe the slate clean once the collections have been paid. This is good news for consumers who want to improve on their credit score especially if they experienced a rough time in paying of their debt.

2. Millions of consumers will now qualify for the VantageScore 3.0- There are millions of consumers who do not have FICO scores because their credit histories were not long enough for them to become eligible; but with the VantageScore 3.0, up to 30 million consumers will now have a shot at qualifying.

The new model will now cater to consumers whose credit history lasted for 24 months. Furthermore, it will also include people whose last credit transaction is less than six months old. Now, consumers who turn to subprime lenders can now apply for loans from regular lenders.

3. It has the same scoring scale as FICO- The original VantageScore used a 501 to 990 point scale. Some people confuse this scale with the FICO’s 300 to 850 point scale. The good thing about this new model is that it has adopted the same point scale as FICO so as not to confuse consumers as well as lenders when they evaluate or assess their potential clients’ credit scores.

4. It won’t record negative history for customers affected by natural disasters- Many people suffer financially especially when they are affected by natural disasters. When Hurricane Sandy occurred, banks and lenders offered to give their clients a break on fees for a certain period of time. The VantageScore 3.0 took a cue from their example by negating any account activity that may affect a consumer’s credit score if it happens during a natural disaster. This is actually very helpful as a lot of people are expected to encounter financial stresses after a disaster. Not only will this help consumers financially, but it will also give them time to cope emotionally.

5. Will lenders adopt the new VantageScore?- The new model is good news to millions of consumers, but will it be good news to lenders as well? According to VantageScore, not all lenders have agreed to adopt the new model. However, according to surveys, seven of the top 10 financial institutions, six of the top 10 credit card companies, four of the top 10 auto lenders and four out of the five mortgage lenders have agreed to use the new model because of its potential to earn them more clients.

The new model of VantageScore is indeed good news to millions of consumers because they can start anew and leave a bad financial history, have a shot at being approved of loans and rebuilding their credit from scratch. This may also be good news to lenders because they will have more clients; however, the new model may bring bad business to subprime lenders and to those who specialize in helping out people with bad credit. The company promises more information and details about the new model of VantageScore. It can be purchased from Experian and just like before, credit scores are available for a price.

View the original article here