VantageScore: Meaning, Model, Components

A VantageScore is a credit score calculated by the three major credit bureaus—Experian, TransUnion, and Equifax. It is a 3-digit number that ranges from 300 to 850, with a higher score indicating a lower risk of default.

VantageScores are calculated using the same information as FICO scores, but they use different scoring models. This means that your VantageScore may be different from your FICO score, even if you have the same credit history.

The VantageScore model is designed to be more predictive of future credit risk than FICO scores. This is because the VantageScore model takes into account more recent credit information, and it also uses different weightings for different types of credit accounts.

The VantageScore model has five components:

* Payment history: This is the most important factor in your VantageScore, and it accounts for 35% of your score.
* Amounts owed: This factor accounts for 30% of your score, and it measures your credit utilization ratio, which is the percentage of your available credit that you are using.
* Length of credit history: This factor accounts for 15% of your score, and it measures how long you have had credit accounts.
* New credit: This factor accounts for 10% of your score, and it measures how many new credit accounts you have opened in the past year.
* Types of credit: This factor accounts for 10% of your score, and it measures the variety of credit accounts you have.

Your VantageScore can be used to determine your eligibility for credit, such as loans and credit cards. It can also be used to set your interest rates and insurance premiums.

If you want to improve your VantageScore, there are a few things you can do:

* Pay your bills on time.
* Keep your credit utilization ratio low.
* Don't open too many new credit accounts at once.
* Diversify your credit accounts.
* Dispute any inaccurate information on your credit report.

By following these tips, you can improve your VantageScore and get better terms on credit.