If the new VantageScore gets some traction, millions of “unscorable” Americans stand to benefit from a credit score higher than that offered by the currently more widely-known and widely-used FICO score. So if old debt or a lack of credit history is hampering your efforts to qualify for new credit accounts, hope for the best in how the new VantageScore is received by lenders.
The three major credit reporting agencies — Experian, Equifax and TransUnion — originally created the VantageScore as a FICO score competitor. Historically, though, the VantageScore has yet to gain much ground. That could change in the wake of changes that help lenders better understand the credit risk of 27 to 30 million Americans who they may otherwise simply not lend to based on the FICO score alone.
As reported by Time, what the new version of the VantageScore does is to into account payment histories on things like rent, utilities and cell phone payments. It also eliminates the use of credit accounts that went into collection, but have since been paid off. All of this should improve considerably the credit scores of those who either have a history of bad credit or no-to-little credit at all.
Of course, the benefit of the VantageScore for consumers is dependent on its use among lenders. Though the credit bureaus say the older version was already used in some capacity by a majority of mortgage lenders and top credit card issuers, other statistics show use of the VantageScore representing less than 10 percent of the credit scoring market.
Still, the new version would seem to have a good chance at boosting the VantageScore’s use. Lenders want to extend as much credit as possible to those deemed credit worthy, and it seems the new VantageScore version could help them identify millions of promising new customers who would otherwise be overlooked.