If you’ve checked your credit score recently, you may have discovered that the number you saw was created by a company called VantageScore using their credit-scoring model called VantageScore 3.0. If you’re only familiar with FICO, it may come as a surprise to you that your FICO score isn’t your only credit score.
Here’s how VantageScore 3.0 calculates credit scores and what it means for your credit.
Table of Contents
- What is VantageScore 3.0?
- Who makes VantageScore 3.0?
- Who uses VantageScore 3.0?
- Why was I provided with a VantageScore 3.0 credit score?
- What does my VantageScore 3.0 credit score mean?
- How is VantageScore 3.0 calculated?
- What’s the difference between VantageScore 3.0 and FICO?
- How to get a better VantageScore 3.0 credit score
What is VantageScore 3.0?
Introduced in 2013, VantageScore 3.0 is the third version of the VantageScore consumer credit-scoring model. Prior models VantageScore 1.0 and VantageScore 2.0 ranged from 501–990 points. VantageScore 3.0 was updated to range from 300 (the lowest possible score) to 850 (the highest possible score), aligning with the FICO scoring model.
Beyond differences in range, each model has slightly different ways of calculating your credit score. Companies like VantageScore create new models or update old ones to paint an ever-more accurate picture of a person’s creditworthiness and how risky it is to lend to them. 1
Who makes VantageScore 3.0?
VantageScore 3.0 is the creation of VantageScore Solutions LLC, a credit-scoring company founded by the three credit bureaus, Experian, Equifax, and TransUnion. Together, the credit bureaus invented the VantageScore model to compete with Fair Isaac Corporation (aka FICO).
Who uses VantageScore 3.0?
VantageScore 3.0 is used by some financial institutions to determine if you’re trustworthy enough to lend money to, and at what interest rate. Those financial institutions include, among others:
- Banks
- Credit card companies
- Mortgage lenders
- Auto lenders
- Asset managers
- Credit unions
However, according to FICO, over 90% of lenders use FICO’s various credit scoring models, not VantageScore’s. 3
That may leave you wondering if your VantageScore 3.0 credit score is relevant at all. After all, if lenders are mostly referencing a score from FICO’s model, what’s the benefit of knowing your VantageScore credit score?
In reality, the way in which your VantageScore and FICO credit scores are calculated is so similar that it’s unlikely your scores will be too far off from each other. Most importantly, when it comes to getting credit cards or loans, the models are also highly unlikely to disagree about your overall creditworthiness.
Why was I provided with a VantageScore 3.0 credit score?
Despite the fact that most lenders use FICO’s credit-scoring models to assess creditworthiness, several major credit score checking services have a relationship with VantageScore 3.0. Those credit score checking services include:
- CreditKarma
- CreditSesame
- Credit.com
- WalletHub
- Capital One Credit Card (CreditWise)
- Chase Credit Journey
If you checked your score with any of those services, they provided you with a VantageScore 3.0 credit score in association with one of the credit bureaus.
What does my VantageScore 3.0 credit score mean?
If you’ve received a score, you’re probably wondering if it’s good or bad. VantageScore 3.0 credit scores range from 300 to 850, and are rated from Very Poor to Excellent.
VantageScore Credit Score Range & Rating
| Credit Score Range | Rating |
|---|---|
| 300–499 | Very Poor |
| 500–600 | Poor |
| 601–660 | Fair |
| 661–780 | Good |
| 781–850 | Excellent |
Note that how VantageScore rates your credit score is unrelated to how lenders will rate your score. What VantageScore considers fair credit may be considered poor credit by a credit card issuer.
Nonetheless, the ratings do provide a basic idea of how strong your credit is.
How is VantageScore 3.0 calculated?
The VantageScore 3.0 credit-scoring model uses the following factors to calculate your credit score: 4
VantageScore 3.0 Factor Weights and Explanation
| Factor | Factor Weight | What it assesses |
|---|---|---|
| Payment History | 40% | Whether you pay your bills on time. Paying late hurts your credit score. |
| Credit Utilization | 20% | Your debt-to-credit ratio. Using less of your credit limit helps your credit score. |
| Depth of Credit | 21% | The age of your credit accounts and the mix of credit you use. Using both credit cards and installment loans shows you’re better able to manage credit. Having older accounts (in good standing) shows you’re reliable. |
| Balances | 11% | How much debt you have. Even if you’re on top of payments, a larger balance hurts your credit. |
| Recent Credit | 5% | How many credit accounts you’ve recently opened or tried to open, resulting in hard inquiries on your credit report that hurt your credit. |
| Available Credit | 3% | How much available credit you have on your revolving accounts (i.e., your credit cards). Having more available credit helps your score. |
What’s the difference between VantageScore 3.0 and FICO?
FICO is a credit scoring company that competes with VantageScore. Therefore, you can’t compare VantageScore 3.0 (a credit-scoring model) to FICO (a company).
However, you can compare their credit-scoring models. When comparing their most widely-used models (VantageScore 3.0 and FICO 8) the differences are minor.
The main differences include:
- Scoring factors: The companies name (and group) their credit scoring factors differently, and assign them different weights—but not in a significant way.
- Scoring speed: VantageScore 3.0 can produce a credit score within 2 months of opening credit; FICO 8 requires 6 months.
- Score allowances: VantageScore 3.0 ignores paid debts in collection; FICO 8 does not.
- Score ratings: VantageScore 3.0 and FICO 8 rate scores slightly differently.
Because the differences between FICO and VantageScore are so minute, the result is that your VantageScore 3.0 credit score is likely going to be similar to your FICO score.
How to get a better VantageScore 3.0 credit score
If you received a low credit score, you’ll need to be patient and manage your money responsibly over 1 to 2 years to fix your credit. You’ll need to:
- Pay your bills on time
- Keep your balances low
- Don’t open too many new credit cards or apply for too many loans
- Pay off your debts
- Dispute incorrect items on your credit report
