Anatomy of a VantageScore Credit Score
VantageScore first exploded on the credit score scene in 2006 as a joint venture of the big three credit bureaus – Experian, Equifax and TransUnion – and now has the distinction of being one of only two scoring models, the other being FICO, to be relied upon by lenders in their lending decisions. VantageScore currently claims about 10 percent of this hard-to-crack market for credit scores used in the lending industry, with the greatest adoption seen in the largest banks and lenders.
[Offer: If your credit score is low, it may be due to credit errors. Lexington Law helps you dispute these errors. Learn more about them here or call them at (800) 594-7441 for a free consultation.]
Who Uses The VantageScore: Nearly one billion VantageScore credit scores were used last year by over 2,000 lenders and other industry participants, including 6 of the 10 largest banks. In fact, over 3 billion VantageScore credit scores were pulled in the last year, including scores used for decisioning, model building, and testing purposes. Source: www.vantagescore.com
Like other credit scores, VantageScore consists of calculations relying entirely on credit bureau information – not income, bank accounts or other assets – to predict how likely you are to pay your credit obligations on time each month. With an emphasis on paying on time, keeping balances low, and avoiding new credit obligations, the simplicity and common-sensibility of credit scores are often marred by the all-too-frequent credit reporting errors that can lead to credit scoring errors, and that can require active management of your credit – much like managing your health.
Introducing VantageScore 3.0
Introduced in March of 2013, and shortly thereafter provided by Credit.com as part of its free Credit Report Card, VantageScore 3.0 brings some new consumer-friendly features to the table, while at the same time providing lenders with up to a 25 percent predictive improvement over earlier models.
What are the Advantages of VantageScore 3.0?
Without a doubt, the most radical feature of VantageScore 3.0 is its ability to calculate a score for 30 to 35 million previously “unscoreable,” or “thin file,” consumers. While many other scoring models require at least six months of credit history and recent credit report updates, VantageScore only requires one month of credit history and less frequent updates. Credit can now be made available to consumers who are brand new to credit, those who only use credit occasionally and people who haven’t used credit at all recently.
Other notable VantageScore 3.0 credit score improvements include:
- Ignoring all paid collections, as well as any collections, paid or unpaid, under $250
- A new score range of 300 to 850, the same scale used by FICO, making it easier for consumers to interpret and manage their credit scores.
- Credit relief for disaster victims, by ignoring accounts negatively impacted by natural disasters.
Score Range: VantageScore 3.0 credit scores now range from 300 to 850, a numerical scale more familiar to lenders and consumers. Source: www.vantagescore.com
VantageScore Credit Education Tools
Of course, for consumers, credit scores are often only as good as the explanations and underlying credit information provided with them. The factors affecting your VantageScore credit score are outlined in the graphic below – helping you answer the question “What influences my score?”.
What Really Matters: The key factors that influence your your VantageScore credit score from your credit report. Not all factors have the same impact on your VantageScore credit score (if one of these categories doesn’t apply to you, the other categories would be adjusted accordingly). Source: www.vantagescore.com
Another tool to help boost your understanding is the reason codes (or score factors) website, which simplifies and translates the codes that appear in your credit report into, get this, plain English.
What Doesn’t Impact My Credit Score?
There are several things don’t factor into the VantageScore model – or any other credit scoring model, for that matter – including race, color, religion, nationality, gender, marital status, age, salary, occupation, employer, employment history, where you live or even your total assets.
A Helpful Credit Management Solution
Currently for consumers, there is a simple, no-cost way to monitor your VantageScore 3.0 score and credit report each month. Credit.com’s secure and free Credit Report Card includes an easy-to-understand credit profile and the VantageScore 3.0 credit score, plus grades and recommendations that can make managing your credit easy. In fact, it really couldn’t be much easier.