For example, American Express uses the VantageScore 3.0 credit score to help users improve their credit scores. You can check your VantageScore through several lender and nonlender providers. According to Experian, here are the score ranges under the VantageScore 3.0 and 4.0 models. However, the most recent VantageScore 3.0 and 4.0 scores range from 300 to 850-the same as most of the FICO Score models. VantageScore models 1.0 and 2.0 scored consumers on a scale of 501 to 900 with corresponding grades of A through F. This enables a greater degree of automation in the lending space-ultimately speeding up the time it takes to process loan applications and yielding faster approvals. Rather than reviewing all three of a consumer’s credit reports, a lender can use the applicant’s VantageScore to gauge their general creditworthiness. Securities and Exchange Commission, Federal Housing Finance Agency and National Credit Union Administration (NCUA). VantageScore is also recognized by regulators, including the U.S. In fact, according to VantageScore, thousands of lenders and nine of the top 10 largest banks use the scoring convention. Landlords, lenders and other financial institutions use the VantageScore to evaluate an applicant’s likelihood of repaying loans. Consider requesting credit limit increases on existing cards or taking out a secured credit card if you don’t have high balances on your credit report. That said, this factor still accounts for 3% of the calculation. Finally, a consumer’s amount of available credit is also classified as less influential for purposes of their VantageScore. To reduce these effects, avoid applying for new credit-especially if you anticipate applying for a mortgage or auto loan in the near future. Applying for new loans or credit cards results in hard credit checks, which can lower your score. Recent credit applications are less influential than most other metrics but are still responsible for 5% of a VantageScore calculation. To perform well in this category, keep your credit balances paid down as much as possible. Deemed moderately influential, a consumer’s total outstanding balances account for 11% of a VantageScore calculation. Optimize this metric by keeping balances on revolving credit accounts below 30% of your total credit limits. This metric is considered highly influential and makes up 20% of a consumer’s VantageScore calculation. A consumer’s credit utilization rate, or debt-to-credit ratio, is the ratio of their outstanding credit balances to their total credit limits. For this reason, it’s best to not close older accounts, even if you only use them periodically. Making up 21% of the credit score calculation, this metric covers how long a consumer has held credit accounts in good standing, and whether they have a diverse mix of revolving credit and installment loans. Though not the most important factor that goes into a VantageScore, the age and type of a consumer’s credit are both still considered highly influential. For this reason, it’s important to make consistent, on-time payments when building and maintaining a strong VantageScore. In fact, it’s said to account for 40% of a score-almost twice the weight of the second most impactful metric. A consumer’s payment history is considered an extremely influential factor in VantageScore calculations. In general, VantageScore 3.0 credit scores are calculated based on the following consumer metrics: The scoring algorithm also incorporates modeling techniques, including trended credit data, machine learning and National Consumer Assistance Plan (NCAP) optimization. VantageScore credit scores are calculated based on data from the three main credit bureaus. So, even though VantageScore 4.0 was subsequently released in 2017, VantageScore 3.0 is still the most popular option among lenders. This is because the data prioritized by the VantageScore 3.0 algorithm makes it easier for people with limited credit history to get a score. Since its debut in 2006, there have been four models of the VantageScore, but VantageScore 3.0-released in 2013-is the most common. We’ll show you how VantageScore works, how it compares to your FICO Score and what you can do to improve your score. For this reason, a consumer can improve their VantageScore by making on-time payments, reducing their credit utilization rate and limiting credit applications. The most common VantageScore version, VantageScore 3.0, has a credit score range from 300 to 850.Īs with the FICO Score, VantageScore calculations are based on factors like payment history and credit mix-each with its own relative weight. A VantageScore is a credit score created by the three major credit bureaus-Experian, Equfiax and TransUnion-to help lenders, landlords and other financial institutions evaluate an applicant’s creditworthiness.
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