Credit Repair

What Is My VantageScore?

credit score smartphone

A credit score is a three-digit number that shows companies and creditors how good (or bad) you are at paying your bills and managing credit. Your credit score is calculated by putting data from your credit report, like your payment history and amounts owed, through a scoring model. Creditors use these scores to decide whether to grant you loans and lines of credit and under what terms.

You’ve probably heard of the FICO credit-scoring model. It’s the veteran in the world of credit, with lenders first using FICO Scores in 1989. But you might not have heard of VantageScore, a newer entry on the scene but still an important part of your credit profile.

In this post, we break down what you need to know about the VantageScore and how it compares with the FICO Score.

What you need to know about VantageScore:

  • VantageScore was created by the three major credit bureaus as an alternative to FICO.
  • VantageScore uses the same scoring range as FICO, 300 to 850, with 850 being the best possible score.
  • VantageScore allows you to build credit more quickly than FICO.
  • VantageScore may ignore accounts in collections if the balance is zero.

A bit of background on the VantageScore

The VantageScore was created by the three major credit bureaus — Experian, Equifax and TransUnion — to offer consumers and lenders an alternative to the FICO Score. However, FICO is still the dominant player in the industry, used by 90% of lenders to make decisions about borrowers.

Credit-scoring companies periodically roll out different scoring editions with different capabilities. For example, FICO Score 8 is currently the most widely used version of the FICO Score. However, there are other FICO credit score versions that may be used for credit card approvals, auto lending and mortgage lending.

VantageScore 4.0 is the newest version of that scoring model. According to VantageScore Solutions, VantageScore 4.0 takes into account trended data, which tracks changes in your credit behavior over time. It also uses machine-learning techniques to more accurately score consumers who haven’t used credit in the past six months.

When pulling your credit scores, you may notice that the VantageScore 3.0 is still the model being used.

Similarities and differences between VantageScore and FICO

Before digging into a few of the differences, let’s highlight some similarities.

Today, VantageScore and FICO both use the same scoring range — 300 to 850, with 850 being the best possible score. Earlier versions of VantageScore used a range of 501 to 990, but it was later changed to avoid confusion among consumers.

Another similarity is that both companies use weighted models to calculate your score from factors such as your payment history, length of credit history, credit mix, overall debt and credit utilization ratio.

What makes the VantageScore different?

Your VantageScore may be easier to access. The VantageScore has become an easier and less expensive score for consumers to access because so many websites, including My LendingTree, offer it for free. Historically, consumers have had to pay to get their FICO Scores directly from myFICO, but the company is working to change that. Today, you may be able to get your FICO Score for free from your bank, credit card company or directly from a credit bureau.

You may be able to build credit more quickly. The VantageScore model can give you a score if you have an account open for as little as one month with recent activity. On the other hand, you need you to have an account open for at least six months to pull a FICO Score.

Collections accounts may have less of an effect if paid off. Recent versions of the VantageScore ignore collection accounts with a zero balance. This is one area in which FICO is playing catch-up to VantageScore. Although many lenders still rely on older versions of FICO Scores, FICO Score 9 disregards paid collection accounts.

Hard inquiries can have a lesser influence. Both scores recognize that people searching for a mortgage or auto loan may shop around for the best rates, which typically results in multiple hard inquiries on your credit report.

Usually, hard inquiries can negatively affect your score. FICO allows for a shopping period of 14 to 45 days during which all inquiries will count as one. However, FICO does not provide a rate-shopping exception for credit cards, and VantageScore does. The VantageScore uses a “14-day rolling window” where multiple credit inquiries for loans and credit cards count as one.

Who uses the VantageScore?

The VantageScore may be used by credit card issuers, installment loan companies, auto lenders, consumer websites, tenant screeners and more. However, the FICO Score is still the most widely used in credit decisions, especially in mortgage lending.

Because of this, checking your VantageScore may not tell you exactly what your creditor or lender is looking at. But it’s still a score that’s worth monitoring.

Where can you access your VantageScore?

Your VantageScore is easy to obtain. You can get it for free by signing up for My LendingTree. The My LendingTree dashboard also provides insights into the factors influencing your score so you can get to work on improving it.

Final word

The VantageScore may not be as popular as the FICO Score, but it is still an important part of your credit profile and something worth monitoring. While it differs from your FICO Score in some significant ways, your VantageScore is still a good indicator of how lenders see you, and steps to improve it can only create more options for you in the future.

 

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