Credit scores are calculated based on a combination of factors and are intended to predict how likely consumers are to repay borrowed money. When you think of your credit score, there’s a good chance the first thing you think of is your FICO score. While FICO is the most well-known scoring model used in credit decisions, it’s not the only one. The other credit scoring model being used more and more often is Vantage Score.
What is Vantage Score?
Vantage Score is a credit scoring system that was developed in 2006 by the top three credit bureaus (Experian, Equifax, and TransUnion) as an alternative to FICO. Your Vantage Score is based on a combination of factors including:
- Age of credit history
- Payment history
- Credit mix
- Total balance, credit usage, and available credit
- New accounts opened
This score is calculated using machine learning and when it was first developed, it was based on a different range of scores than FICO. Recently, the Vantage Score model began using the same range of credit scores that FICO uses.
What is Your Vantage Score Used for?
Credit scores streamline the process of evaluating a consumer’s creditworthiness by summarizing what’s in a credit report as a three-digit number. Before credit scores were created, lenders made decisions on a borrower’s ability to repay by reading through everything on their credit report. It was a time-consuming process that required specialized training.
By using credit scores such as Vantage or FICO, lenders can get an idea of your creditworthiness in a much shorter amount of time. Like your FICO score, your Vantage Score can be used in lending decisions for credit cards, car loans, student loans, and more, and credit decisions can be based using a consistent formula.
Vantage Score Versus FICO Score
There have been four models of Vantage Score since this scoring model was created. Vantage 1.0 and 2.0 were based on a range of 501 to 900. Newer versions of Vantage, which are Vantage 3.0 and Vantage 4.0, are based on scores of 300 to 850. Want to know how your credit score measures up? read HERE.
Even though FICO and Vantage now use the same scoring range, the way their scores are calculated isn’t exactly the same. While they consider many of the same factors, they don’t give each factor the same weight. For example, Vantage Score doesn’t factor paid collection accounts and considers trends in your credit utilization.
Improving Your Credit Score
No matter which credit scoring model is being used, if you’re trying to attain a good credit score, keep your credit utilization low and pay your bills on time. For your credit score to be accurate, your credit reports must contain accurate information. Consumers are entitled to a free credit report each year from AnnualCreditReport.com. Review your credit report and make sure there isn’t any inaccurate information.
If you need help disputing errors on your credit report, Dovly’s AI credit engine can make this process simple. Try it risk-free with our free membership tier and find out how we can help you improve your credit score.
