WHAT IS 'VantageScore'

VantageScore is a consumer credit rating product developed by three credit rating agencies, Equifax, TransUnion and Experian, as an alternative to the FICO Score, created by Fair Isaac Corporation.

BREAKING DOWN 'VantageScore'

VantageScore was launched in 2006, and uses a different rating scale then FICO’s. VantageScore is calculated through a weighted average of a consumer's available credit, recent credit, payment history, credit utilization, depth of credit and credit balances.

VantageScore places the greatest weight on payment history and credit utilization, just as the FICO Score does. FICO develops scores with data from each credit reporting agency separately, while VantageScore runs its statistical analysis with a combination of all three. As a parallel to its numerical score VantageScore also has an alphabetical score ranging from A to F, with a determination of A meaning that a consumer is the most credit worthy. Most lending institutions continue to use the FICO Score as it has been around much longer, since 1956.

How VantageScore Works

Both VantageScore and the FICO score models operate on data stored in the consumer credit files and maintained by the three national credit bureaus. The models then conduct a statistical analysis on the data to predict the likelihood a consumer will default on a loan. Both VantageScore and FICO models represent the risk of a loan default in the form of three-digit scores, with higher scores indicating a lower risk. VantageScore generates a score between 501 and 990, while FICO generates a score between 300 and 850.

Anyone with a VantageScore under 630 is considered to have poor credit. An average or fair credit rating is anywhere between 630 and 690. Between 690 and 720 is considered a good credit score, and anything over 720 is considered to be excellent.

The components of a VantageScore represent payment history, depth of credit, utilization of available credit, balances and recent credit. Payment history refers to whether or not a consumer makes timely bill payments, and depth of credit refers to the age of a consumer’s credit history and type of accounts they have opened. Balances are total outstanding loans, and recent credit includes the number of hard inquiries that have been made into a consumer’s account.

Utilization and available credit include how much total revolving credit a consumer uses. For example, if someone has a $10,000 line of credit in one month and that person has drawn $5,000 from that line, their credit utilization would be 50 percent.

  1. Credit Score

    A credit score is a number ranging from 300-850 that depicts ...
  2. FICO (Fair Isaac)

    FICO is a software company that specializes in services for assessing ...
  3. Judgmental Credit Analysis

    Judgmental credit analysis is a method of approving or denying ...
  4. Good Credit

    Good credit is a classification for an individual's credit history, ...
  5. Credit Rating

    A credit rating is an assessment of the creditworthiness of a ...
  6. Consumer Credit File

    A consumer credit file contains data about a consumer’s past ...
Related Articles
  1. Investing

    How Your VantageScore Credit Report Is Calculated

    Deficiencies in the FICO credit report have led to the creation of a new credit scoring system - the Vantagescore. Find out what factors determine this credit score, and how the model can benefit ...
  2. Personal Finance

    New Credit Score Changes: Whom They Help, Whom They Hurt

    New credit scoring guidelines at VantageScore that incorporate trended data may impact your credit score in a big way.
  3. Personal Finance

    FICO Or FAKO? The Limitations of Free Credit Scores

    There's something you should know about the scores you get from free credit scoring services: They usually are not the same FICO scores lenders pull.
  4. Personal Finance

    Meet The Company Behind Your FICO Score

    There are other credit scores that evaluate lending risk, but FICO is still the choice of most U.S. lenders.
  5. Personal Finance

    New Rules That Could Trash (or Help) Your Credit

    Cable bills and similar financial obligations will soon be factored into your credit score. Good news if you're an on-time payer. If not, become one!
  6. Personal Finance

    Common Things That Improve And Lower Credit Scores

    Credit scores are used by lenders to estimate credit risk. Find out how you can better earn the trust of lenders and reap the benefits.
  7. Personal Finance

    What Credit Score Should You Have?

    We break down credit scores by age to see what your score should be and how it will affect your major purchases.
  8. Personal Finance

    Top Places To Get A Free Credit Score Or Report

    When's the last time you checked your credit report? With all the hacking out there, don't wait for the car dealer to find problems when you need a loan.
  9. Personal Finance

    Best Ways to Get Free Credit Scores in 2016

    You've probably seen spammy ads offering the opportunity to check your credit score for "free." Well, not all credit score services are created equal!
  10. Financial Advisor

    How to Build a Credit Report for Your Adult Child

    They may not be true adults yet, but you can start building a credit history for your young adult children now.
  1. Why doesn't Credit Karma offer FICO scores?

    Credit Karma offers a popular way to track credit scores for free. While it does not offer FICO scores, the information it ... Read Answer >>
  2. What's the difference between a credit rating and a credit score?

    Learn about the differences between credit ratings and credit scores, and review how these expressions of creditworthiness ... Read Answer >>
Trading Center