Understanding the Vantage Score Model
what is a Vantage Credit Score
Earlier on, financial institutions depended on the FICO (Fair Isaac Corp.) algorithm to evaluate a client’s credit score. However, nowadays, lenders are turning to the Vantage Score model to assess their clients.
First things first, what is a Vantage Credit Score? It is a scoring model developed to forecast your probability to pay back borrowed cash. The model was developed by leading credit companies and is used by banks, landlords, and others to assess if you should be given a loan.
How Does the Vantage Score Model Work?
Well, the most significant difference between the Vantage Model and FICO is on financial factor evaluation. Ideally, FICO weighs essential factors that may affect your score regarding percentage.
On the other hand, Vantage uses an influence scale to score your creditworthiness. For example, a factor such as your payment history is marked as hugely influential. Additional features such as age, percentage consumed, and type of cards are ranked under the highly influential category.
However, both scoring models rely significantly on your payment history when evaluating your final score.
Calculating Your Total
You can get a score provider’s information on their website. Various financial sites provide a Vantage Score module that you can use for free.
Below is a breakdown of significant factors that this application uses when calculating your results:
- Payment History
It is an essential factor and affects about 40% of your report. Late or missed payments leave a substantial dent on your report. On the flip side, making your payments early or when due boosts your score.
- Credit Card Type and Age
This amounts to roughly 21% of your total. Vantage takes into consideration if you own different types of credit and for how long. Most financial institutions like clients who have more than one credit type and have held them for a considerable amount of time.
Utilization, as it is otherwise known, takes about 20% of your report. Credit use of about 30% or less of your allocated amount translates to a higher grade. It also shows how well you spend your money.
- Reported Balances
Balances both current and past are an indication of your chances of paying back money owed. Having low balances on your account is always a good sign that you will pay back the cash loaned out to you.
The Scales and Mode of Operation
Typical FICO reports range from 300 to 850. Vantage uses the same ranges when calculating your credit card mark. The higher your total, the better your chances are of securing a loan or mortgage.
Vantage Score is faster than FICO when calculating your tally. This means that when using the Vantage Score, you will get your credit results faster than when using the FICO system.
Additionally, Vantage only uses one month of your credit history to generate your credit report. This is unlike FICO, which will require at least six months of financial history to calculate your loan worthiness.