What do you need to know about the revamped VantageScore

The much talked about VantageScore 3.0 is the modified version of original credit score model. VantageScore was introduced in the country by the leading credit reporting agencies to compete with FICO and their scoring model.

Some interesting changes have been made in the new and improved version of the VantageScore.

Changes that have taken place in VantageScore:

1. VantageScore won’t count negative history if you’ve been affected by natural disasters

After millions of people suffered due to the onslaught of recent natural disasters like Hurricane Sandy, several traditional financial institutions have decided to not charge fees temporarily. It seems that VantageScore has taken the same stance. The modern version of VantageScore may overlook any negative account activity that occured during a natural disaster.

2. The credit score scale will be like that of FICO

VantageScore used to range from 501 to 990. Consumers were confused because FICO’s scale was something different. The FICO credit score ranges from 300 to 850. The new VantageScore will have the same range from now on.

This is convenient for both the consumers and lenders.

3. Paid off debt collection accounts will not be used to calculate score

Have a paid off debt collection account? If yes, then there’s great news for you. Vantage credit scoring won’t take your paid off collection account into consideration while computing your score. Usually, when you pay off a collection account, even in full, that account is not removed from your credit report. The negative account will still be there on your credit report just not counting towards your score. FICO will use this account while calculating your credit score.

This is great when trying to improve your credit.

4. More consumers will have a credit score

Millions of consumers were unable to qualify for a FICO credit score due to insufficient credit history. Now, thanks to VantageScore, now they will be eligible for a credit score. The new credit scoring model will analyze credit activities in the past year and give a score based upon that. Even if your credit history is 6 months old, you can qualify for a credit score.

Only time will tell if all the main lenders and credit card companies will use VantageScore in the future. Currently, only handful of the lenders use VantageScore. It is expected that VantageScore will come up with additional changes in the next few months. It will be interesting to see if FICO credit scoring model also comes up with changes to give competition to VantageScore.