- VantageScore is a credit scoring model that assigns consumers a score from 300 to 850 based on their credit health.
- Several factors, including payment history, credit usage and the age of credit accounts, affect an individual's VantageScore.
- Consumers can check their VantageScore for free to monitor their score over time, as well as track their progress as they work toward their financial goals.
While you may think of your credit score as a single number, the truth is that there isn’t just one type of credit score — there are several. VantageScore is a credit scoring model created as a joint venture by the three major credit bureaus, Experian, Equifax and TransUnion. When you apply for credit, lenders may look up your VantageScore to help them decide whether to approve your application, and a higher VantageScore score may unlock more financial opportunities for you.
Here, we will discuss what VantageScore is, how the scoring model works and what factors influence the calculation of your VantageScore.
|VantageScore vs. FICO|
|VantageScore and FICO are consumer credit scoring models that help lenders assess an applicant's creditworthiness. Both scoring models typically assign a score between 300 to 850 (though there are scoring variants with different ranges), with a higher score indicating stronger credit. Although both VantageScore and FICO models take into account similar data, such as a consumer’s payment history, to generate credit scores, they use slightly different scoring models, meaning your VantageScore may differ from your FICO score.|
How your VantageScore is calculated
VantageScore is calculated based on credit data pulled from all three credit reporting bureaus: Experian, TransUnion and Equifax. It takes into account several aspects of your credit history, then uses machine learning to predict your creditworthiness and assign you a score.
The factors VantageScore utilizes when calculating your credit score include:
- Payment history: How often you pay your bills on time, and whether there are missed or late payments in your credit history. A consistent payment history is one of the best ways to achieve good credit since it signals that you’re more likely to repay your lenders.
- Age and type of credit: The length of your oldest account and the types of credit you have access to. A longer credit history contributes to a good credit score, and a mix of credit — for example, an auto loan and a credit card — can potentially improve your score.
- Credit utilization: The percentage of available credit that you’re currently using. Lenders prefer low credit utilization, which signals that you’re maintaining a manageable amount of credit. High credit utilization — for example, maxing out a credit card — can lower your score.
- Total balance: The amount you still owe to lenders. A high balance often coincides with higher credit utilization, which can reduce your score.
- Available credit: More available credit typically indicates a lower credit utilization ratio, which may increase your credit score.
- Recent credit history: VantageScore considers recent hard inquiries into your credit history — for example, the credit check a lender may run when deciding whether to approve a credit application. Hard inquiries can have a small, temporary negative impact on your score.
Some factors are weighted heavier than others when determining a VantageScore, and the relative importance of each factor can vary between VantageScore models (VantageScore 3.0 and VantageScore 4.0, etc.).
VantageScore 3.0 vs. 4.0
VantageScore continually researches and develops new scoring methods, and its most recent scoring models are VantageScore 3.0 and VantageScore 4.0. Both models use a VantageScore range from 300 to 850, assigned based on an individual’s credit history, as well as machine learning technology that predicts consumers’ behavior.
As the latest scoring model, VantageScore 4.0 uses more advanced machine learning techniques than VantageScore 3.0. As a result, VantageScore 4.0 can assign more accurate scores to consumers with limited credit history, such as people new to the country who are building their credit in the United States. It also tracks changes in credit behavior over time, so consumers' recent credit behavior more accurately aligns with their score.
VantageScores fall between 300 and 850, similar to FICO scores. A higher score indicates stronger credit, and achieving a good or excellent score may increase your chances of being approved for credit.
Who uses your VantageScore?
Lenders, including financial institutions, may look at your VantageScore when you apply for consumer credit, such as a new credit card, an auto loan, a personal loan or a mortgage. However, there are other situations where a third party may perform a credit check and look at your VantageScore.
For example, a potential landlord may look at your VantageScore when you apply to rent a home and telecommunications companies may run a credit check and view your VantageScore when you sign up for a new phone plan.
How to check your VantageScore
Part of monitoring your credit involves checking your credit history and your credit score from time to time. Fortunately, VantageScore allows consumers to request a free credit score.
To check your VantageScore, visit VantageScore’s website, which lists providers that allow you to check your score for free. Log into your provider of choice to view your current VantageScore, and continue to re-check your score regularly — three to six times a year, depending on your goals — to track how it changes over time.
How to improve your VantageScore
Achieving (or maintaining) a good or excellent VantageScore is a smart financial goal. Strong credit may not only make it easier to successfully apply for new credit when you need it, but also may help you secure more favorable interest rates than if you have a lower score.
Now that you understand which factors go into calculating your VantageScore, you can tailor your financial behavior to improve your credit. The following tips can help:
- Make your payments on time, every time: A strong payment history significantly affects your VantageScore. Regularly paying your bills on time indicates creditworthiness, which can help raise your score.
- Lower your credit utilization: A low credit utilization helps improve your credit score. Paying off your debts more aggressively — for example, by making more than the minimum monthly payment if your lender allows it — lowers your credit utilization and benefits your score.
- Keep your oldest credit account open: A longer credit history can positively affect your credit. Your oldest account should remain open and in good standing to maximize your score.
- Manage your credit applications: Several hard inquiries can temporarily lower your VantageScore. Ensure each new credit application fits into your financial strategy, and avoid excessive credit applications to minimize the impact on your score.
Finally, include checking your VantageScore, and your FICO score, as part of your ongoing credit monitoring plan. Keeping tabs on your VantageScore helps you track how your financial behavior affects your credit — for example, noticing a boost in your score after you pay off a credit card — and helps you stay motivated as you work toward your financial goals.
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