A VantageScore® is a credit score created by the three major credit bureaus Experian, TransUnion and Equifax. This score helps financial institutions, lenders and landlords determine a consumer’s creditworthiness.
Since VantageScore first came into the scene in 2006 there have been 4 models. The most common model VantageScore 3.0 was released in 2013. A newer model, VantageScore 4.0, was released in 2017, however, 3.0 remains the most popular version.
A good VantageScore credit score typically ranges from 300 to 850 points, with a good score falling in the 661-780 range. A good or excellent score can help consumers qualify for loans, receive lower rates, and be more likely to qualify for employment or a property rental.
Here’s a breakdown of how VantageScores 3.0 are calculated:
40% Payment History
A consumer’s payment history is one of the most influential factors in determining a VantageScore credit score. It accounts for 40% of your score. So, it’s important to make on-time consistent payments when building good credit.
21% Credit Age & Mix
A consumer’s credit type and age of accounts are other important influences on credit scores. Also, having a good mix of revolving credit and installment loans can help boost your score.
20% Credit Utilization
The percent of credit limit used, or debt-to-credit ratio is the second most highly influential data on your credit report and makes up 20% of your score. Keeping balances below 30% of your total available limits is important.
11% Account Balances
Your total outstanding balances account for 11% of your overall score, making it important to keep your accounts paid down as much as possible.
5% Recent Credit Applications
Lenders, landlords, or employers perform a hard credit inquiry can lower your score. Always ask for a soft pull in advance of a hard pull when seeking a new loan, because soft inquiries provide similar information without affecting your credit.
3% Available Credit
The amount of available credit may not rank high on the list, but it’s still a determining factor when it comes to having good credit. To boost your credit score, consider asking for a credit limit increase on your credit cards.
You can request a free credit report annually here. If your credit score is not as high as you’d like we recommend proactively managing your credit by following these tips:
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- Be sure to pay all your bills on time.
- Remove inaccurate information by writing to the bureaus.
- Keep your credit utilization below 30%.
- Maintain a diverse mix of credit accounts.
- Always request a soft inquiry before a hard inquiry.
- Keep old accounts open.
- Limit the number of applications you submit.
Lenders or mortgage brokers looking to improve their customer lifecycle with a fully-customizable loan prequalification solution should contact FPN to learn more about PreQual.
