VantageScore 3.0 Promises a Better Picture of Previously “Unscorable” Individuals

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The current credit rating system is not beneficial for the majority of Americans. VantageScore has released a new credit rating system that will help those who were previously "unscorable" qualify for lower-interest loans, but until it's more widely used by traditional lenders, those in need of loans can turn to Los Angeles Car Title Loans for help.

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Americans who find themselves on the wrong end of the current credit rating scale can rejoice: the three major credit bureaus have been working together to release a new version of VantageScore, which will help lenders determine how “unscorable” individuals will act as borrowers. Americans with no credit history or who only have credit activity from years ago will now have a better chance of qualifying for credit cards, mortgages, or auto or business loans with manageable interest rates.

With the current credit rating system, those who are “unscorable” – primarily young people, recent immigrants, people who have declared bankruptcy, and American’s who are “unbanked” – would now be scored on information from alternative data sources, like rent, utility and cell phone payments.

Between 27 and 30 million Americans are currently considered “unscorable.”

Alternative data sources are strong predictors of an individual’s financial stability. Rent payment is an especially predictive piece of data, since most renters spend more than half of their monthly income on rent alone. Renters who pay on time will fare extremely well from this new system. Phone bill payment is another strong indicator of stability. Many people without credit cards have a cell phone, and making payments on time proves that they are financially responsible.

VantageScore won’t penalize people who have had accounts go into collections once they have paid off the debt. Currently if a person has had an account go into collections, it will affect his or her credit score for the next seven years, even if the debt has been paid off. This new rating system will make it easier for those who faced unexpected circumstances, like a job loss, to build their credit back up.

VantageScore’s main competitor is the well-known FICO, the most-used scoring company. Lenders still primarily use FICO, though VantageScore states that 7 of the top 10 financial institutions, 6 of the top 10 credit card issuers, 4 of the top 10 auto lenders, and 4 of the top 5 mortgage lenders use its score to some capacity.

Until more lenders adopt VantageScore as their primary credit rating system, Los Angeles residents have an alternative lender to turn to when they find themselves facing financial difficulties: Los Angeles Car Title Loans provides borrowers with loans up to $10,000 regardless of their credit scores. Instead, loan amounts are based on the value of the borrower’s vehicle. Featuring low interest rates and flexible repayment options, Los Angeles Car Title Loans is the clear option for Los Angeles residents who do not qualify for traditional loans due to their credit scores.

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Cheryl Wilson
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