Money Research Collective’s editorial team solely created this content. Opinions are their own, but compensation and in-depth research determine where and how companies may appear. Many featured companies advertise with us. How we make money.
What Is a Vantage Score and How Does It Work?
By Susan Doktor MONEY RESEARCH COLLECTIVE
If you have basic knowledge of how credit reporting works, you probably know your credit score is based on the information in your credit reports. And that credit data is collected by three major credit bureaus: Experian, TransUnion and Equifax.
What you may not know is that you can have several credit scores based on each credit report, depending on the credit scoring model being used. This article takes a closer look at the VantageScore model, which more and more lenders are using as the basis of their credit decisions.
Table of contents
What is a VantageScore?
From mortgage lenders to credit card issuers, all lenders rely on credit scores when determining whether to extend you credit and what interest rate to charge you. VantageScore is one such score.
The VantageScore model was developed in 2016 by the three major credit bureaus: TransUnion, Experian and Equifax. Like FICO scores, VantageScores are calculated by aggregating the data contained in your credit reports. However, both models weigh the factors that go into the credit score calculation differently.
One distinct advantage of the VantageScore model is that it’s easier to develop sufficient credit history from which to calculate a credit score. Establishing credit under the FICO model usually takes about six months of steady credit activity, while you can have a VantageScore within a month or two of opening your first credit account.
Over time, the VantageScore model has been updated to include new credit data. Since its inception, there have been four versions of the VantageScore model.
VantageScore Ranges
The two most recent versions of VantageScore, VantageScore 3.0 and VantageScore 4.0, use a rating scale between 350 and 850. Scores are then classified into ranges, from “poor” to “excellent,” as follows.
| Rating | Rating Scale |
| Excellent | 781–850 |
| Good | 661–780 |
| Fair | 601–660 |
| Poor | 300–600 |
VantageScore vs. FICO Scores
VantageScores and FICO scores are calculated using the same basic criteria. Still, each model uses a slightly different algorithm and assigns different weights to the factors that make up your score.
Read our article on VantageScore vs. FICO scoring models for more details.
How does VantageScore work?
VantageScore 4.0 and VantageScore 3.0 use similar criteria to evaluate your credit and assign you a credit score.
Here are the factors that have the most impact on your VantageScore, in order of influence:
1. Total credit usage, balance and available credit
Under the VantageScore model, total credit usage is extremely influential. You need to remain under the credit threshold you’ve been granted to have a good or excellent score.
For example, when you apply for a credit card, the company will approve you for a maximum credit limit. Your credit utilization ratio, the difference between what you owe and your overall credit limit, should ideally be below 30%.
Lower credit utilization rates result in higher credit scores, so use credit sparingly and judiciously to earn a higher VantageScore.
2. Credit mix and experience
The second most important factor in your VantageScore calculation is your credit mix. Having a varied credit mix demonstrates you can manage different types of credit responsibly and will result in a higher VantageScore.
The two types of credit that matter most to credit bureaus are installment credit and revolving credit. With installment credit, you receive a lump sum of money and make fixed payments for a predetermined period to satisfy your credit obligation. Mortgages and auto loans fall under the installment credit umbrella.
Revolving credit, on the other hand, allows you to borrow funds as needed from a maximum credit limit, so your payments are not predetermined. Examples of revolving credit include credit cards, store cards and lines of credit.
3. Payment history
Under the VantageScore model, payment history is moderately influential. Failing to pay your credit accounts on time can negatively impact your credit score, limiting your ability to borrow and open new credit accounts.
4. Age of credit history
While less influential than other factors, the age of your credit history still affects your VantageScore. Lenders want to see that you can handle credit responsibly before lending you money. Since having a long, positive credit history will boost your VantageScore, keeping old credit accounts open even when you use them infrequently could work to your advantage.
5. New accounts opened
When you apply for credit, the lender will request a full copy of your credit report from one or more credit bureaus. That process is known as a hard credit pull or hard credit inquiry. Hard credit inquiries temporarily lower your credit score for up to 12 months and appear on your report for up to two years.
While a couple of hard inquiries per year won’t hurt your VantageScore by much, trying to open too many new accounts over a short period could hurt your credit. Lenders may see that as a sign that you’re living beyond your means and are less likely to repay your debts.
How do you get a VantageScore?
When you apply for a loan or credit card, your lender will request your credit reports from all three bureaus. The lender will then use a credit scoring model to calculate your credit score based on the information in your credit reports.
While FICO scores are widely used across the U.S., VantageScores are becoming increasingly popular. Your lender may use this scoring model when determining your creditworthiness.
VantageScores are free to consumers and may be obtained from several providers, including Credit Karma and CreditSesame.com.
How long does it take to get a VantageScore?
You may have sufficient credit history to obtain a VantageScore within a month or two of opening a credit account. By contrast, it may take up to six months to get a FICO score.
What is a VantageScore FAQs
What is a good VantageScore?
A good VantageScore falls in the 661 to 780 range. A score between 781 and 850 is considered an excellent VantageScore.
Is VantageScore the same as FICO?
VantageScore and FICO are different credit scoring systems owned by separate companies. Each model uses a unique algorithm that places different values on the credit criteria that go into their credit score calculations. Your FICO score and VantageScore may be close but are not identical.
Is a VantageScore higher than a FICO credit score?
While VantageScore 3.0 and 4.0 use the same credit scale as FICO — 300 to 850 — each model weighs credit criteria differently. Which score is higher and which is lower will depend on the information contained in your credit file, the version of the credit scoring model being used and even the company that's requesting the information.
For example, VantageScore considers all hard inquiries from a type of credit made within 14 days as a single inquiry. FICO extends that period to 45 days. While hard inquiries typically don't lower your score by more than five points and the dip is only temporary, this illustrates potential differences between scores.
What's the difference between VantageScore 3.0 and VantageScore 4.0?
VantageScore 3.0 and VantageScore 4.0 were both designed to meet the needs of lenders seeking information about borrowers' creditworthiness. VantageScore 4.0 improves upon the accuracy of VantageScore 3.0 by catching more delinquent accounts. In addition, both versions use slightly different credit modeling methods.
Summary of our guide to what is a VantageScore
- VantageScore is one of the two most widely used credit scoring models in the U.S.
- The VantageScore model calculates your credit score using the same criteria as FICO but weighs those factors differently.
- There are different versions of the VantageScore model.
- The two most recent versions of the score, VantageScore 3.0 and 4.0, follow the same numerical credit scale as FICO.
- You don’t need a long credit history to have a VantageScore.
- The VantageScore model was designed to give “credit invisible” consumers like college students and minorities the ability to become scorable and gain access to credit.
