What is a VantageScore and do you have one?

Anytime you apply for a mortgage, an auto loan, a credit card, or any other kind of credit, the potential lender uses a scoring system to determine how safe or risky a bet you appear to be.

For decades, FICO scores have been the dominant credit scoring system. And though they still command the lion’s share of the credit scoring market, a competitor called the VantageScore entered the scene about 15 years ago.

VantageScore was created in 2006 as a joint venture among the three credit bureaus: Equifax, Experian, and TransUnion. In contrast, FICO scores are the product of an independent company called FICO, originally called Fair, Isaac and Company.

As far as most consumers are concerned, the difference between these two scoring models is not significant, and virtually everyone has both types. Like FICO, VantageScores consider a number of characteristics of your credit use and history, and weigh each with different importance.

While not identical, the weighting of factors is fairly similar between the models.

The highest impact factor in both cases is your on-time payment history. In a VantageScore, this accounts for 40% of your calculation. Next most important is a mix of how much you owe and how much credit line you still have left, making up about 35% of your score.

The remaining considerations are your “credit depth” (age of your credit history and the diversity of credit types), which contributes 20% of your score, and how recently you’ve applied for new credit, providing the last 5% impact.

One ntoable difference between the models is that it takes just a single account with as little as a month of history to be assigned a VantageScore, while FICO scores typically require a six-month history. So VantageScores more quickly provide a score for those new to credit.

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