Although still not in widespread use there is a scoring system out there that could confuse credit challenged consumers applying for a bad credit car loan.
You and VantageScore
As anyone at Auto Net Financial will tell you, it’s important to know where you stand with your credit score, since our mission here is to put customers with bad credit into affordable, reliable vehicles so that they can repair their credit and move back into conventional financing as soon as possible.
We also stress the fact that it’s very important to know your credit score and what is on your credit report before you try buying a new car by filling out our online bad credit car loan application. And while the best-known credit score is your Beacon or FICO score, the three major credit bureaus have thrown a new wrinkle into the market by creating a credit score of their own called VantageScore
VantageScore
VantageScore is the scoring model that was jointly developed by Equifax, Experian and TransUnion and unveiled in March of 2006. It uses a numerical rating of 501 to 990 (unlike the FICO score of 300 to 850) and then assigns a letter grade to the score:
* 901-990 equals “A” credit
* 801-900 equals “B” credit
* 701-800 equals “C” credit
* 601-700 equals “D” credit
* 501-600 equals “F” credit
VantageScore score calculation
Although, like FICO, the mathematical model for VantageScore is not known, the company has released the different categories and how these categories are weighted to come up with the score:
Payment History – 32%
Credit Utilization – 23%
Credit Balances – 15%
Depth of Credit – 13%
Recent Credit – 10%
Available Credit – 7%
The reason
Basically, the credit bureaus created it in order to make more money. When a business runs a credit bureau, the credit bureau pulls up the credit history. Then, if they want a FICO score, the bureau runs this history through the FICO system and sends the report, along with the credit score, to the business. Since the credit bureau used the FICO model, they also pay FICO for the credit score. By creating their own scoring system, the bureaus are able to eliminate the middle man (in this case FICO) and avoid paying any extra fees.
Since FICO owns their scoring system as well as the scoring model, VantageScore could not duplicate the scoring system, so that also had to be changed.
As we see it
At this point in time, it is hard to say how the new scoring system has affected consumers. As it is, most of us have a difficult enough time just trying to manage our credit information in the three different bureaus. It seems as though throwing in a second scoring system could complicate matters even further.
As far as we can tell, the only advantage to consumers will be if the new scoring system takes into account sources other than traditional lenders – which could help those consumers with new or limited credit histories. But if this isn’t the case and if the new system further limits worthy customers from having banks extend them credit, the consumer loses again.
For more information about bad credit auto loans, go to www.autonetfinancial.com and begin the process of rebuilding your credit by filling out our secure online car loan application. If you need additional assistance, go to the “About Auto Net” tab and click on the “Contact Us” line where you will find our toll free number. Our customer service representatives are available to answer your questions during normal business hours.
