VantageScore is the fastest-growing credit scoring company in the U.S. and is known for the industry’s most innovative, predictive, and inclusive credit score models. VantageScore credit scores are essentially a grade, ranging from 300 to 850, with a higher score indicating your financial responsibility.
A higher VantageScore increases your odds of credit card and loan approval and helps you secure lower interest rates. On the other hand, a lower score could bar you from securing financing when you need it. But what’s a ‘good’ VantageScore? How do you know if yours is good?
WHAT IS A VANTAGESCORE CREDIT SCORE?
VantageScore’s original credit model was created to be an alternative to traditional credit scores. Subsequent VantageScore models have innovated even further upon the original, becoming more inclusive and predictive. VantageScore’s models are tri-bureau, meaning they derive a numerical score based on the credit files kept by the three Nationwide Consumer Reporting Agencies (NCRAs) - Equifax, Experian, and TransUnion. Their credit file information is run through an algorithm that calculates your VantageScore credit score based on the factors listed below.
Financial institutions often pull your VantageScore credit score to assess the risk in lending to you. A lower score indicates a greater likelihood that you’ll be unable to pay back what you borrow. You’ll find few lenders willing to take that risk. A higher score indicates that the lender’s risk of losing money is low, so they’ll be more likely to work with you.
HOW IS YOUR VANTAGESCORE CREDIT SCORE CALCULATED?
The way your VantageScore credit score is calculated depends on which version of the score you’re using. For example, VantageScore 3.0 is our game-changing model, widely used by lenders. VantageScore 3.0 was further refined with the introduction of more recent models, including VantageScore 4.0, VantageScore 4plus, and VantageScore 5.0.
Let’s compare two VantageScore credit scoring models and how they weigh each factor in your credit score. Here are the factors that make up your VantageScore 3.0:
| Factor | Weight |
| Payment history | 40% |
| Depth of credit | 21% |
| Credit utilization | 20% |
| Balances | 11% |
| Recent credit | 5% |
| Available credit | 3% |
The VantageScore 4.0 model has made a few changes to this formula, emphasizing payment history and new credit a little more and balances and depth of credit a little less. Here’s how it weighs each factor:
| Factor | Weight |
| Payment history | 41% |
| Depth of credit | 20% |
| Credit utilization | 20% |
| Recent credit | 11% |
| Balances | 6% |
| Available credit | 2% |
Payment History
Payment history looks at whether you pay your bills on time. This is where late payments hurt your score. The later the payment and the more late payments you have, the more serious the impact on your VantageScore. How recently you made a late payment also matters. They stay on your credit report for seven years, but their effect diminishes over time.
Depth of Credit
Depth of credit looks at the age of your credit accounts. This includes your average, oldest, and youngest account age. Older account ages help your VantageScore because they give lenders a longer-term view of how you manage your money. This helps them make more educated decisions about whether to lend to you.
The depth of credit category also looks at the type of credit accounts you use. There are two main types: revolving and installment debt. Revolving debts have a monthly spending limit, but your actual bill could vary. Credit cards are the most common type of revolving debt.
Installment loans like mortgages, auto loans, and personal loans have a predictable monthly payment. Showing that you can successfully handle both types of credit will boost your score more than just having a single type of credit on your reports.
Credit Utilization
Credit utilization looks at how much credit you use and how much you have access to. It takes into account your balances on installment loans, but focuses more on your revolving credit.
The relationship between the amount you charge to your credit cards each month and your total credit limit is your credit utilization ratio. You want to keep this ratio under 30% if possible, as long as it remains above 0%. A high credit utilization ratio indicates a heavy reliance on credit and suggests that you may be living beyond your means.
The balances category looks at the total balances remaining on all of your credit accounts, both current and delinquent. High balances can hurt your score, even if you’re current on all of your payments. But the effect isn’t severe, especially in the VantageScore 4.0 model, where it only accounts for 6% of your total score.
Recent Credit
Recent credit looks at the number of credit accounts you’ve recently opened and the number of hard inquiries showing on your report. Every time you apply for a new loan or line of credit, the lender does a hard inquiry on your report, and this drops your score by a few points. But credit scoring models understand that people typically shop around when applying for new credit. VantageScore considers all hard inquiries that take place in a 14-day period as a single inquiry.
Opening several new credit accounts close together is a red flag for lenders because it could indicate a potential change of fortune or an increased reliance on credit that could leave you unable to pay back new funds that you borrow. VantageScore has given this category more weight in its 4.0 scoring model.
Available Credit
The final category is available credit. This category looks at how much credit you have available on your revolving credit accounts. This doesn’t have a huge effect on your score but having a larger amount of available credit can raise your score slightly.
https://vantagescore.com/resources/knowledge-center/why-are-my-credit-scores-constantly-changing
WHAT IS A GOOD VANTAGESCORE CREDIT SCORE?
With the introduction of the VantageScore 3.0, the nationwide consumer reporting agencies switched VantageScore’s scale from 501-990 to the 300-850 scale that lenders were used to from traditional score models. It’s up to each lender to decide on the minimum acceptable VantageScore credit score that applicants need for a loan or credit card, but VantageScore breaks down the scores as follows:
| Score Range | Credit Tier |
| 781–850 | Superprime |
| 661–780 | Prime |
| 601–660 | Near prime |
| 300–600 | Subprime |
VantageScore Superprime is the best rating you can have and indicates a financially responsible borrower who can be trusted to pay back what they borrow. VantageScore Prime credit is still good, and you shouldn’t have much trouble getting approved for loans or lines of credit if you fall in this range.
If you have VantageScore Near Prime or Subprime credit, you’ll probably struggle a little more when applying for loans or credit cards. VantageScore Near Prime borrowers may get saddled with higher interest rates than their Prime and Superprime counterparts, while Subprime borrowers might be denied outright. Take steps to improve your VantageScore credit score if it falls into one of the lower two ranges.
WHY DO I HAVE MORE THAN ONE VANTAGESCORE CREDIT SCORE?
Many people think they have a single VantageScore credit score, but you actually have one for each of your three credit reports. These scores are often similar but might not be the same. Some financial institutions don’t report your account information to all three consumer reporting agencies, so one account might only show up on one or two of your reports instead of on all three.
You also have a VantageScore 3.0 and a VantageScore 4.0 credit score. Like all credit-scoring companies, VantageScore periodically updates its scoring model based on existing data to more accurately assess risk for lenders. You won’t know which score lenders will see when they pull your credit reports, so it’s best to check all of them to see where you stand.
VantageScore 4.0 is the most widely used credit score for credit card decisions, and it’s now required for mortgage applications by both Fannie Mae and Freddie Mac. Additionally, VantageScore 5.0, the newest of VantageScore’s credit score models, uses advanced data science to enhance accuracy, boost predictiveness, and unlock new growth opportunities for lenders, particularly those focused on unsecured lending products. As VantageScore 5.0 is adopted by lenders, you’ll begin to see this even more innovative score more and more.
HOW DO I GET MY VANTAGESCORE CREDIT SCORE FOR FREE?
Several banks and credit card issuers offer free VantageScore 3.0 scores to consumers, though these are typically only from a single consumer reporting agency. In some cases, you don’t even have to work with that lender to receive a free VantageScore credit score. VantageScore’s website maintains a list of companies that provide free VantageScore credit scores to their customers or the general public.
Although it’s not free, you can also get VantageScore credit scores directly from the consumer reporting agencies. You might purchase one of these scores to supplement your free VantageScore credit score if your free score is only based on your credit report from a single bureau.
https://vantagescore.com/consumers/free-credit-scores
HOW DO I RAISE MY VANTAGESCORE CREDIT SCORE?
Raising your VantageScore credit score - or any credit score for that matter - comes down to managing your money responsibly. The most important thing you can do is always pay your bills on time. Set up automatic payments or reminders to help you stay on top of this task if you struggle to remember. If you know a payment is going to be a little late, reach out to your lender to notify them and request that they don’t report it to the credit reporting agencies. They might comply if you’ve been a reliable payer up until that point.
Limit your credit card usage to 30% or less of your total credit limits each month. This will become even more important as more lenders transition to VantageScore 4.0. Unlike the VantageScore 3.0 model, which only looked at your credit utilization ratio for the previous month, VantageScore 4.0 considers your credit utilization ratio for up to two years prior.
Try to have a mix of revolving and installment debt on your credit report, but avoid taking out a loan solely for the purpose of improving your credit. If you’re applying for a new loan or line of credit, submit all your applications within a 14-day period so they’re counted as a single inquiry. To maximize your score, avoid applying for new credit for at least six months after.
If you’re struggling to get approved for any type of credit because your VantageScore credit score is subprime, try opening a secured credit card. These cards are designed to help individuals with poor credit improve their scores. To open a secured credit card, borrowers make a security deposit, which is typically a few hundred dollars and equal to their credit limit. If you fail to pay back what you borrowed, the lender keeps the security deposit, and no harm is done. It reports your monthly payments to the credit reporting agencies just like a regular credit card, and if you decide to close the card in the future, you’ll get your security deposit back, assuming you don’t have a balance.
Beyond that, you just have to give your credit score time to improve. Credit scoring models like VantageScore are designed to provide lenders with a long-term view of how you handle your money so they can make informed decisions about whether or not they’re comfortable working with you.
Assuming you follow the tips above, you can expect to see your score rise over time simply because your accounts are aging, and you’ve demonstrated a longer history of responsible money management.
VantageScore credit scores are one of the most popular credit scoring models in use today. All top 10 U.S. banks use VantageScore scores or digital tools to provide consumer credit products or generate greater insights into consumer behavior. Your VantageScore credit score plays a significant role in your odds of credit approval and the interest rates you’ll get. If you don’t know your VantageScore credit score, get your free score from one of the listed providers and try some of the above tips to improve your score if you see room for improvement.
It takes time to make significant changes to your credit score, so start now, even if you’re not planning to apply for new credit in the near future.
