What is the VantageScore?
What is the VantageScore?

In the 1970s, the Fair Issacs Company created the first credit scoring system, dubbed the FICO score. This has since been standardized as the industry's leading credit score model to assess potential borrowers. More recently, the VantageScore was created in collaboration with the three major credit bureaus (TransUnion, Equifax, and Experian) as a new generic proprietary credit score model marketed as a more "consistent interpretation" and "accurate score" than FICO. As Credit Karma provides you with your VantageScore for free, here's what you need to know about it.

Credit Scores Vary

First of all, it's important to keep in mind that you do not have one "true" credit score. There are actually over 100 different credit scoring models used in the industry that varies by bureau, reporting agency, model type, and lender. Each model uses a different algorithm that weighs each part of your credit report differently, which explains why you may have a 750 from Credit Karma and a 762 from FICO. We've previously addressed how to understand the credit score differences; there are indeed many different credit score models, but they are all highly correlated. They use different ranges, different formulas, and the information found on your credit report can differ from bureau to bureau, but all the models aim to assess your credit history and translate it into your 3-digit credit score number.

The VantageScore

The three major credit bureaus offer their own proprietary models but usually provide the FICO score to lenders. The VantageScore was created as a consistent credit score model across the three bureaus to compete with the FICO score so that they could offer lenders a more standardized score and cut out the Fair Issacs Company.

The VantageScore is being touted as "The New Standard in Credit Scoring", and it can potentially become big if the bureaus can compete successfully with the stranglehold FICO has on lender. It just depends on whether lenders will be willing to change to a different model.

The VantageScore offers additional features that the FICO model doesn't incorporate, such as predictive scoring and a 24-month review of credit history. Here are some of the main differences between the two competitors:

VantageScore FICO
  • Score range is from 501 to 990
  • VantageScore uses letter grades to spell out your credit health: 901-990 = A or Super Prime, 801-900 = B or Prime Plus, 701-800 = C or Prime, 601-700 = D or Non-Prime, and 501-600 = F or High Risk.
  • Takes into account 6 components of your credit report: payment history, utilization, balances, depth of credit, recent credit, and available credit.
  • VantageScore claims to score thin file consumers more accurately by providing predicative scores for consumers with limited histories

Additional features:

  • VantageScore is based primarily on the last 24 months of actions on a consumer's credit file
  • Keep in mind, your VantageScore will still vary between the three credit bureaus. While they use the same scoring model, the information on your credit report may differ from bureau to bureau
  • FICO range is from 300 to 850
  • No letter grades for FICO
  • Takes into account 5 components of credit report: payment history, amount of debt, credit history, types of accounts, and inquiries.
  • Thin file consumers often cannot generate a credit score at all, or are scored with inflated, high scores because they have few credit actions on file


Bottom Line

The VantageScore's particular credit scoring method is especially good news for consumers with thin files and consumers who may have prior negative actions against them but have a good recent history.

Again, please keep in mind that the VantageScore is one of dozens of models in use. What is most important is that you monitor and manage your credit health by checking your credit score every few weeks. Keeping track of your credit score over time, not just once or twice, will give you the most valuable insights into how to adjust your credit habits to build towards a healthy score.


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I see a lot of misconceptions in these comments. Just wanted to share a few things I've learned about the credit game after being pretty stupid about it in my twenties. As far as the scores themselves go, people need to understand that these fluctuate routinely and there are dozens and dozens of different models out there used by lenders. There's FICO, FAKO, Vantage, and many, many others. They all use different algorythyms which result in different scores. The credit score websites are the same way and can give you a different score for the same bureau as well between different sites depending on which model they are using. This site gives you a good glance at your FICO and vantage score and a good baseline to judge where you're at and that's all. If you are going to be applying for a mortgage or another major purchase, they'll pull the scores they will use (usually a version of FICO) and disclose them to you as part of the application process. If you want to check them in advance, you can go to myfico.com and order them, but they're around 20 bucks for each bureau, so you probably only want to do this if you are looking at a major purchase. If not and you just want to monitor your transunion, this site is great (and best of all, it's free). You can use credit sesame to monitor your experian score for free as well. I am not aware of a free site for Equifax as of yet.  In this day and age of identity theft, I would also recommend paying for an identity monitoring service as well. I use Identity Guard and pay 15 bucks a month (got a discounted rate for singing up through next advosor). For this I get active monitoring that lets me know if anyone ever tries to apply for a loan or credit card in my name and all three FICO scores updated quarterly. It's worth it to me for the peace of mind knowing that if an identity thief does somehow get a hold of my information and tries to start opening accounts I can cut if off immediately before the damage mushrooms. Use this site and credit sesame to keep an eye on your transunion and experian scores for free and pay for an identity monitoring service each month if you can squeeze the extra 15 or 20 bucks a month in and you'll build a very good active picture of your credit and how it changes over time.

In regards to rebuilding credit (the stage I am currently in) and using credit in your favor, start with credit cards if you're in the hole. You  might have to get a secured one if your score is really, really bad (I didn't have to do this, but some people have no choice). Start with one and build from there. Use the card for 6 months to establish a baseline good credit history that shows you are paying on time. As your score moves up, you'll qualify for non-secured cards. You'll have to start with the cards that have an annual fee, however most of these still have a 12 to 15 month 0% APR introductory period. Use that period to make purchases each month of around a hundred bucks or less. Whatever keeps you under 20% of your total available balance (this puts you in the excellent range of your credit utilization ratio, which will increase your score the quickest). Once the APR period runs out, only make one or two small purchases each month and then pay the balance off in full each month. You need to do this because most credit card companies will mark a card as inactive and stop reporting it to the bureaus if you don't use it for a certain period of time. Once you move your score up enough to qualify for the no annual fee cards, you can either keep these accounts open if you don't mind the annual fee, or close them all together. If you do decide to close them, make sure you don't do it before you have opened at least the same amount of accounts with no annual fees. Remember, the amount of active and paying on time accounts on your credit report is a major factor in your score, so you want to keep this in mind when balancing the merits of closing the account and eliminating the annual fee versus removing an account with a good paying history from your report. Once your score is in the good/excellant range you can cancel these secured/annual fee cards with no hesitation just as long as you have at least a couple of other credit cards with no annual fee in good standing still open after you cancel them.

Once your score moves up enough to qualify you for the no annual fee rewards cards, you can start using the credit game in your favor. I like the cashback cards like Chase Freedom and Capital One Quicksilver. These types of cards give you a free hundred bucks if you spend a certain amount within the first few months. I get gas and groceries on the card for the first few months in order to hit the qualifying amount and just pay the balance with the money I would have used for the same thing out of my paycheck. Once I get the free sign up cash, I dial it back and keep it under that magical 20% or less of the balance each month while getting cash back on everything I buy. A lot of these cards have special categories that rotate on a quarterly or annual basis where you can get as high as 5% cash back on anything you buy. There are cards in all sorts of other areas of interest. I like the NFL card that gives me 20% off of everything I buy at NFL.com amongst other things. Once you reach the stage where can can qualify for these types of cards, you can earn all sorts of benefits from discounts to cash back that are beneficial to you and really make the annoying credit game work in your favor.

A few other tips...

Don't get discouraged. Even if your score is so low that you only can qualify for a secured card, you CAN get your score up to the exellent range and not have to spend a lifetime getting there. You just have to be disciplined and follow a plan.

Stay away from the debt consolidation companies. A lot of these companies do more damage to your credit than they do help. If you are delinquent, negotiate with the company you are dleinquent with directly. Most of the time you can pay off your debt by only paying 25% to 50% of what you owe. Once you are delinquent enough they pull your debt off of their ledgers as a tax write off and after that point they'll be happy to take whatever additional amount they can get back (within reason) because they already wiped you off the books as an asset. Always negotiote directly with your debtor if possible and avoid collection agencies and credit consoldication companies. If a debt collector is harrassing you and you are finally in a position to pay the debt, ignore them and go straight to the company you have the debt with if at all possible. If you do have to deal with the debt collector, make sure they have the delinquent account erased from your report once you have paid it in full and not just reported as paid. They will tell you they cannot do this, but that is quite frankly bull. Make sure you negotiate this and get it in writing before handing over payment because they do frequently lie and tell you they will do something that they have no intention of doing once they have your payment. If you can't pay the debt, you do have the right to instruct them to stop calling you. If they are threatening you with legal action, this is often illegal and you can force them to stop. Research your rights. Google search consumer credit protection rights and go from there. Arm yourself with knowledge. Even if you're in a horrible financial position and have multiple delinquencies, you still have rights and can dig yourself out. Make sure you know what they are and don't let the debt collection and credit consolidation vultures prey on you.

Be careful with balance transfer cards. A lot of people use them to try to consolidate debt on high interest cards, but most of them have fees attached. Usually around 3 to 5 percent of the balance you are transfering and most of them hit you with an interest charge on the full amount if you don't pay it off in a cretain amount of time. They can work in certain situations, but only use these as a last resort and make sure you read the fine print and know all of the possible penalties and interest charges before taking the plunge.

Never get a cash advance with your credit card. The fees are absolutely ridiculous and you are completely screwing yourself anytime you do this.

Be wary of store cards as well. Only use them if you really are going to be spending a lot of money at that store and doing it for many years into the future. Some of them can be very beneficial if you really do spend a lot and do it frequently at the store, but quite a few of them do not have the benefits to make it worth the interest and other fees they charge unless you really are spending in large amounts and doing it frequently. There are some good ones out there though, not all are bad. Just always make sure you read the fine print and know all of the fees and charges before signing up for one (or any other credit card for that matter).

Always keep your cards under 20% of the total balance each month. You can go as high as 40% in a crunch and it won't hurt you too bad. Even up to 60% won't damage you too harshly (but it will sting), but anything over 60% of the total balance will steadily bump your scores back down. Credit utilization ratio is very, very important. Once you've dug yourself out of the hole and are amongst the good graces of the good/excellant range, STAY DISCLIPLINED. As long as you keep those accounts paid on time and under 20% each month, you'll always be in good graces and will qaulify for the best car, mortgage, and cash loan interest percentages and terms that are out there and will save yourself thousands and thousand of dollars when making major purchases like a car or a home. For a mortage good credit can mean the difference of staggering amounts of money over the course of a thirty year mortgage.

It can seem almost impossible to dig out, but you can do it. Start small, build the amount of accounts that are active and are being paid on time each month, and stay disclined with your spending. ALWAYS pay your bills on time. If you do this your score will climb steadiy over time and you WILL get to the point where it's back in good/excellant standing. Once you're finally there, stay within you limits, use the cash back and or other rewards and bonuses to your advantage, and use the credit game to your advantage intead of theirs.

Comment by
olderandwiser78

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Helpful to 11 out of 13 people

 I dont get it.  I have a 751 (Excellent - by 1 pt yay!) CK score and a 756 (C) VantageScore.  Also my insurance is a poor (forgot number).  How is this possible.  In the last two years i paid of a ton of debt and have only make positive financial moves to get my score to 750 from a 630ish.  WTF????

Comment by
krysolma

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Helpful to 5 out of 6 people

Same story here. Not sure why my VantageScore (C) is so much lower than my Credit Karma score (765) relatively speaking...

Reply by
jacob296

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Helpful to 3 out of 3 people

The only reason the big 3 created the Vantage score was because they didn't want to pay for the FICO license anymore. What they consider a "better" gauge of people's credit was a way for them to save money.

This whole thing has to stop. People should have one score and that's it. There are already 4 different scores - FICO, Vantage, homeowners insurance, and car insurance. Pretty soon, we will have 15 different scores, or something that ridiculous, on us. 

The industry doesn't give a crap about people - what else is new. People who are trying to rebuild their credit are immediately put out of the running for anything decent with the Vantage score. I have a good credit score but Vantage puts me down to a bad credit score.

People should be very angry about this. I am. 

Comment by
rvgirl42

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Helpful to 5 out of 6 people

I dont really understand the newvantage score... my normal score is 768 which is quite good, but my vantage score is only 743 whichbased upon its scale is not very good (only C) ??? I have not done anyhitng "Bad" in the last 24 months ( no late payments ever...) , so why do I have a bad vantage score?

Comment by
cwmcmurray

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743 vantage score is not bad. It's rated as prime. 

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Reply by
Franco1985

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"701-800 = C or Prime" try reading the article first. The question was about Vantage score. 

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Reply by
Franco1985

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Helpful to 6 out of 9 people

700-799 = C, that's hardly prime,

800-899= B, still not prime,

900-1000 = A, prime

Reply by
submarine11

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meant 900-990 = prime.

Reply by
submarine11

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I wouldn't pay any attention to the Vantage Score, there aren't any lenders that use it... If you have a 768 you're in real good shape, you should qualify for the best rates with any lender.... 

Reply by
jtrador

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Despite the supposed predictive value of the Vantage score I find it unrealistic.  I have never had a late payment and pay in full each month.  Yet when I increase the amount of items charged my score immediately drops, now down to B, even though all accounts are paid in full each month.  This makes no sense and is certainly not predictive of ability to pay. When you increase credit card purchases Vantage apparently thinks you in dire financial condition and are doing this only because you can't pay your current bills.  Based on what?

Comment by
river222

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Helpful to 2 out of 2 people

If my actual credit score shows as Excellent (above 750) why is my Vantage Score only a "C"? That doesn't seem acurate.

Comment by
Redou30

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This week my Karma score increased from 664 to 705 while my Vantage score jumped a gigantic 661 to 813.  I applied for Citi credit online and was declined.  I called their credit analyst and she said my Experian score (she wouldn't give me the score) but when I asked if it was below she confirmed it.  EQ is perfect.  TU and EXP have one small neg which will fall off in 30 days.  She said they use 10 different scoring models;  one for credit cards, another for lines of credit, blah blah.  I have had credit for over forty years and understand nothing.  All I did for this huge jump was lower the one Visa I have with Wells Fargo fro 80% utilization to 0 zero.  I want to get a small mtge in Florida (guaranteed by the VA for the first 25% (no down) and no PMI.  Guess I'll wait until Nov while home prices are on the rise as mtge rates.  I hope this helps some of you.

Comment by
howard3100

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I agree with you howard3100. My score jumped as well when I brought down the debt on ONE card from 90% utilization to less than 10%. My other balances are all under 10% and my Credit Karma score shot up 35 points in a few weeks.

Reply by
ClockHoured

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So, just a quick FYI - VantageScore 3.0 was just released this year (2013). It no longer gives a score from 500-990, but a score of 300-850. It has also changed how some of the items are calculated see here http://your.vantagescore.com/score-influences.  For those who want to check it out you can go http://www.vantagescore.com/ or to their consumer site http://your.vantagescore.com/

Comment by
fa3365

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...and here were are in mid-February 2014 and CK is still apparently displaying the VantageScore v2.0 model, even though Transunion is using v3.0.  Quizzle (another free service similar to CK and Credit Sesame) displays an Equifax VantageScore on the 300-850 scale (v3.0).  So which is it, CK?  Are you displaying for us a VantageScore v2.0 score and scaling, or are you showing us a v3.0 score with v2.0 scaling?  CK -- you're an awesome free service, but please provide some clarification on this subject.

Reply by
sblakeup

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I had shaky credit a few years ago and I followed this similar model; opened a secured credit card with cash which reported to the credit agencies and I've got my score up almost 100 points now.  This didn't happen over night but was due to a combination of paying everything on time, paying down my credit card balances to almost zero, and getting extra credit with the secured card.  I still have one more old collection to pay off but I'm very encouraged with how much my score has gone up just by monitoring it every month and striving to be responsible now.

Cheers!

Joe

Comment by
joekarns

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any idea how often they update your scores.?   I have my credit cards paid down to the 20% mark with the usage being at around 5 % and my score hasnt budged?  *** accurate is Credit Karma?  Thanks for your help

Reply by
dmartinlpn

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who uses vantage score looking for a loan thanks,

Comment by
Starceo

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