How is the New Vantage Score Calculated?

Do you know your credit score? For a lot of people, concerns with identity theft and acquiring lending opportunities have made them much more aware of this number. Under the FICO credit scoring system, the three major credit reporting bureaus -- Experian, TransUnion, and Equifax--all calculate a number from 300-850 and assign it to you as your credit score.

However, there has always been a divergence between the numbers concluded by the three agencies. Sometimes this difference can be minor, maybe one or two points. Other times, though, the difference can be staggering, at 20 points or more. This is because they all used to score you based on their own methods, with no regulatory system in place.

Now, in an effort to optimize and streamline how credit scores are calculated, the "big three" have teamed up to create VantageScore. Under this new system, your credit score is ranked between 500-990. The methods by which they come to this number are all the same now, so discrepancies should theoretically be eliminated.

Further, VantageScore assigns a letter grade to each category of score as well, so you technically get two scores in one: a number and a letter. However, the old FICO system is still the rule of the day, so you may not be directly affected by VantageScore just yet. It still remains to be seen how lenders and the market will react to this new system.

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