Credit Scoring Methods – It’s Not Always Apples to Apples

Law Practice ChannelAs a lender, we rely on credit scores to help us decide who we should lend money to.  As you might guess, it’s important to us as a lender that we do business with people and law firms that demonstrate an ability and willingness to properly manage and repay their debt in a timely manner.

While it’s important for consumers to track their credit history and know their credit scores, it’s also important to note that not all credit scores are the same.  Most lenders use the FICO/Beacon scoring methodology and all 3 reporting agencies (i.e. TransUnion, Equifax and Experian) provide these scores.  However, a newer scoring methodology (Vantage) is being seen in the marketplace on occasion that has a different scale.  It appears as if all 3 reporting agencies can also provide Vantage scores.

The Vantage score uses a 500-990 scoring range and the FICO/Beacon uses a 300-850 range, so a particular score on the Vantage system is not the same as the same score on the FICO/Beacon system.  While it is not easy to compare the two, based on my research, I would say that if you have a 650 score (or so) on a FICO/Beacon model, you would have a roughly 750 score using a Vantage model.

Here is a link to a good overview of the differences between the two – http://creditcardforum.com/blog/vantagescore-vs-fico-score/.

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