What Is VantageScore?

What Is VantageScore?

Let me explain VantageScore to you directly: it's a consumer credit scoring model that the three major credit bureaus—Equifax, Experian, and TransUnion—launched in 2006 as an alternative to the FICO score, which the Fair Isaac Corporation created back in 1989. Both models are widely used today, and I'll break down how VantageScore stands out.

Key Takeaways

VantageScore assigns you a score between 300 and 850 based on your credit history, serving as an alternative to the more common FICO scores. It was developed by those same three credit bureaus, which still use FICO alongside it. What sets VantageScore apart is its use of machine learning techniques to give a more accurate and predictive view of your creditworthiness—I'll get into the details next.

How VantageScore Works

The current version is VantageScore 4, and it relies on six factors with specific weightings to calculate your score. Payment history carries the heaviest weight at 41%, followed by age and mix of credit at 20%, credit utilization at 20%, new credit at 11%, credit balance at 6%, and available credit at 2%. The top three factors alone make up 81% of your score, so focus there if you're looking to improve.

Payment history shows how reliably you've paid your bills on time. Age and mix of credit consider how long you've had accounts and the variety, like combining credit cards with auto loans—older accounts and diversity help. Credit utilization measures what portion of your available credit you're using; keep it low for a better score.

VantageScore pulls data from all three credit bureaus, which compile credit reports from your creditors and sometimes court records. These reports cover your accounts like mortgages and cards, going back about seven years, but they exclude things like your income, assets, marital status, race, or ethnicity. Since not all creditors report to every bureau, your reports can vary, but VantageScore's tri-bureau approach is a key advantage—it calls itself the first and only such model.

It also uses machine learning and trended data, which tracks changes in your credit behavior over time rather than static snapshots. This lets VantageScore score more people, especially those with thin or short credit files, without lowering standards.

What Is a Good VantageScore?

VantageScores range from 300 to 850, just like current FICO scores—higher means you're seen as more creditworthy. Based on Experian's breakdown, excellent is 750 to 850, good is 700 to 749, poor is 550 to 649, and very poor is 300 to 549. Earlier versions used a 501 to 990 scale, but that's changed.

Differences Between FICO Scores and VantageScores

FICO scores are still the most common, used by about 90% of top lenders according to FICO, but VantageScore is gaining ground—usage grew 18% from 2019 to 2022 per Oliver Wyman. FICO uses five factors with different weights: payment history at 35%, amounts owed (including utilization) at 30%, length of credit history at 15%, credit mix at 10%, and new credit at 10%.

Key differences include VantageScore's use of all three bureaus' data versus FICO's single-bureau basis. FICO has multiple versions tailored to lenders, with Equifax and TransUnion offering 13 each and Experian 14. FICO needs at least six months of history or a recent update, while VantageScore works with shorter or dormant files, scoring about 37 million more people and covering 94% of U.S. adults.

How Can You Obtain Your Credit Score?

You can get your credit score for free from many banks and credit card issuers, or through websites that offer them. Often, these free scores are VantageScores, so check what you're getting.

How Can You Obtain Your Credit Reports?

By law, you're entitled to one free credit report from each of the three bureaus every 12 months via AnnualCreditReport.com. Remember, this doesn't include your score—you'll need to get that separately.

How Can You Improve Your Credit Score?

For both FICO and VantageScore, the fundamentals are the same: pay your bills on time every month and keep your credit utilization below 30% as a rule. Stick to these, and you'll build or maintain a solid score.

The Bottom Line

VantageScore covers about 94% of adults, so you likely have one or will get one soon. It differs from FICO in several ways, but the habits for a good score are similar—pay attention if you plan to borrow in the future.