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. FAKO Score

    A FAKO score is a derogatory term for a credit score that is ...
  2. FICO Score

    A FICO score is a type of credit score that makes up a substantial ...
  3. Credit Mix

    The different categories of debt within a consumer's credit history ...
  4. FICO (Fair Isaac)

    FICO is a software company that specializes in services for assessing ...
  5. Bad Credit

    A qualification of an individual's credit history that indicates ...
  6. Good Credit

    Good credit is a classification for an individual's credit history, ...
Related Articles
  1. 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.
  2. 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.
  3. Personal Finance

    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!
  4. Personal Finance

    Getting Your Credit Score from a Bank

    That all-important, once-secret number is now easy to obtain from financial institutions and credit card companies.
  5. Personal Finance

    More Banks Offer Free (Actual) FICO Scores

    Lenders overwhelmingly use the FICO credit score when it comes to determining creditworthiness. And thanks to a new initiative, consumers can see it too.
  6. 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.
  7. Personal Finance

    6 Ways to Build Credit Without a Credit Card

    Although it's a bit more complicated, it's definitely possible to build a credit history without traditional credit cards.
  8. Personal Finance

    Is It Worth Paying To Check Your Credit Score?

    Generally, a free credit report is all you need. If you've had some credit issues, it may be worth buying your credit score to get a finer level of detail.
  9. Personal Finance

    Your Credit Score: More Important Than You Know

    Credit scores affect key aspects of your personal and professional life. Knowing your score and managing your credit input can make a big difference.
  1. How to Find Mortgage Lenders That Use VantageScore

    Understand the difference between VantageScore and FICO, and learn how to locate a mortgage lender that uses VantageScore ... Read Answer >>
  2. Is Your Credit Score Affected by the Number of Cards You Have?

    Learn how your credit score, or FICO score, is measured by creditors to check your potential credit worthiness for loans ... Read Answer >>
Trading Center