VantageScore: Everything You Need to Know

The VantageScore is a credit scoring model that was created by the major credit bureaus in 2006. It’s a joint project between Equifax, Experian, and TransUnion, and it’s designed to provide a more accurate and consistent credit score than the traditional FICO score.  

While the VantageScore is not as widely used as the FICO score, it’s still important to know about – especially if you have a poor credit history. In this guide, we’ll cover everything you need to know about the VantageScore, from how it’s calculated to how it can impact your ability to get loans and lines of credit.  

The VantageScore range is 300-850 and its calculation takes into account different factors such as payment history, types of credit cards you have, and how long they have been open. We will go over these factors more in-depth later on, as it is crucial for you to understand how exactly every factor is calculated.   

It’s also important to understand both FICO and Vantage credit scores and how they differ. This is due to the fact that different lenders use different scoring systems so you should be prepared for both scenarios.  

What Exactly Is a VantageScore?

VantageScore is a credit scoring system, just like FICO. It uses several different factors to determine your creditworthiness and weighs them out differently than FICO does.  

The newer version widely in use today is VantageScore 3.0, released in 2013 (the previous iteration was 2.0). This new version of the score features two important updates:   

• It now includes rental data in its calculations.  
• It borrows some information from an individual’s banking history to help predict how a certain individual will use their credit moving forward.   

These changes make it more similar to FICO than ever before. However, there are still some key differences between them that are worth knowing about.   

Lastly, the VantageScore model is constantly being updated as new data becomes available, so this makes it a better predicting tool for assessing the lender’s risks.  

In today’s world, it’s generally seen as a more accurate reflection of your creditworthiness than the FICO Score and that’s why many lenders choose to switch over.  

Who Uses VantageScore?

VantageScore is used by many credit card issuers, mortgage lenders, auto lenders, retail stores, and other financial institutions to help them evaluate borrowers’ creditworthiness.   

VantageScore is also used by many traditional lenders, including banks, credit unions, and online lenders. Some landlords and utility companies also use VantageScore to decide whether to approve applicants for housing or services. They can even have an impact on whether you’re approved for a job—some employers use them when screening prospective employees.  

This means that if you are applying for a loan or credit card from one of these companies or institutions, VantageScore will be part of their decision-making process.  

You should be familiar with two main types of VantageScore: classic and plus. Classic VantageScore is used by most lenders and landlords. Plus, VantageScore includes additional information that may be helpful for people with a limited or no credit history.

How Is VantageScore Calculated?

The VantageScore is calculated using a variety of factors, including payment history, amount of debt, length of credit history, types of credit accounts, and recent credit activity. This information is then compiled into a single score that can range from 300 to 850 (with 850 being the highest).  

All these factors we mentioned are contributing by a different percentage to the overall Vantage scoring and that’s in this order:  

• Payment history (35% of your score)  
• The amount owed (30%)  
• Length of credit history (15%)  
• New credit accounts and types of recent credit inquiries (10%)  

In general, the higher the score, the more likely it is that an individual will be approved for a loan with favorable terms (e.g., a low-interest rate). Conversely, individuals with lower scores may be seen as higher risk and may be subjected to higher interest rates or even be denied loans altogether.  

It’s important to keep in mind that each lender has its own unique criteria for what they think is a “good” or “bad” score, so it’s always best to check with them directly to see where you stand. If you need any help on how to check your VantageScore, we recommend you contact your bank.  

Additionally, don’t forget that your VantageScore may fluctuate over time depending on changes in your credit history.  

What Factors Influence VantageScore?

All the factors we mentioned above, such as your payment history, the amount of debt you have, the length of your credit history, and the types of credit you have, will influence your overall score.  

Payment history is the most important factor in determining a VantageScore credit score. It takes into account whether payments are made on time, and how often payments are missed. If you have a lot of missed payments you should not expect a very high score.  

The amount of debt a person has can also affect their scores. People with a lot of debt will be seen as higher-risk borrowers, and therefore their scores may be lower.   

The length of someone’s credit history is also taken into account, so people with long histories are generally seen as more reliable borrowers.  

Finally, you should not forget that the type of credit a person has can also influence their score. Different types of credit – such as mortgages, car loans, and credit cards – can all have different effects on a score. Having a mix of different types of credit is generally seen as a positive thing for your score.  

What Are the VantageScore Ranges?

The vantage scoring system varies a bit depending on the version you or your lender uses. Here, we will take a look at how VantageScore 3.0 scores range. It goes from 300 to 850. The higher your score, the better your creditworthiness is. Here are the different categories:  

• 300–499 Deep subprime  
• 500–600 Subprime  
• 601–660 Near prime  
• 661–780 Prime   
• 781–850 Super prime  

If you have a good or excellent VantageScore, you’re likely to qualify for the best terms on loans and credit cards. A score in the fair range may still qualify you for some credit products, but you’ll probably pay higher interest rates. If your score is in the poor range, you may find it difficult to get approved for any new credit products.  

However, you can take the needed steps and improve your scores and then qualify for much better offers.  

VantageScore vs. FICO: What’s the Difference?

For starters, FICO is the most widely used credit score, while VantageScore is a newer credit system that’s gaining popularity. This is not surprising considering that the FICO was created in 1989. It also has seven different versions available while VantageScore has just four.  

Both scores range from 300 to 850, with higher scores indicating better creditworthiness.  

One key difference between the two is the way they’re calculated. FICO scores are based on data from your credit report, while VantageScore uses a proprietary scoring model that looks at both your credit report and your non-credit report data.  

Another difference is that FICO scores are available for free, while you’ll need to pay for your VantageScore through a subscription service.  

One significant difference is that the VantageScore weights certain types of information differently than the FICO score. For example, the VantageScore puts more emphasis on recent credit activity, while the FICO score gives more weight to your overall credit history.  

Finally, keep in mind that lenders may use either score when making decisions about whether to approve you for a loan or extend your credit. So, it’s always good to know where you stand on both scales.  

How to Check and Improve Your VantageScore?

Well in order to improve your score, you first need to know what the number is. But how to get your VantageScore?  

You can check your VantageScore by visiting the Experian CreditView® and Equifax Complete™ websites. You will need to register for an account with each site to be able to access your report. The reports you receive will not contain all of your credit information, such as your full credit history or a comprehensive list of inquiries made on your behalf. They also won’t show any additional factors that may have influenced the scoring model used by each agency (known as “underwriting models”). But this will give you a good general idea of your score.  

Once you got to know this number, there are a few things you can do to improve it:  

1. Pay your bills on time – This is one of the most important factors in determining your score. Make sure to pay all of your bills on time, including credit cards, mortgages, car payments, etc.  
2. Keep your balances low – Another important factor in determining your score is how much of your available credit you’re using. Try to keep your balances below 30% of your credit limit to help improve your score.  
3. Dispute any errors – If you see anything on your credit report that doesn’t look right, dispute it with the credit bureau. This can help improve your score by removing any negative information that shouldn’t be there.  
4. Use a mix of credit types – Having a mix of different types of credit (mortgage, car loan, credit card) can help improve your score. Try to use each type of credit responsibly to help boost your score even further.  
5. Don’t close old accounts – Lenders like seeing that you have a long history of managing your finances well, so keep your accounts open and don’t start new ones if you don’t have to.  

Bottom Line

VantageScore was created by the three national credit reporting companies (Experian, Equifax, and TransUnion) as an alternative to the FICO scoring model. Today, it is used by many lenders, including mortgage lenders, credit card issuers, and auto lenders. However, not all financial institutions use this type of scoring system.  

Generally speaking, a higher VantageScore indicates a better credit history and a lower risk of defaulting on the loan. So, if you have a high score, you are more likely to be approved for loans and credit cards and to get better interest rates. However, even if your score is not great, remember you can always improve it by following the tips we gave you. Because VantageScore puts such a big emphasis on recent credit history, try to pay all your bills on time and your score will soon rise.  

Having a good score can give you access to competitive interest rates on loans or other products offered by lenders. Therefore, improving your score will save you money in the long run.