What is a VantageScore 4.0?
VantageScore is a credit model created by Experian, Equifax, and Transunion with scores ranging from 350 (lowest) to 850 (highest).
Is a Vantage Score the same as a FICO score?
The short answer is no. There’s created by different organizations. The FICO score is created by a company named Fair Isaac Corporation (FICO), a data analytics company based in San Jose. The VantageScore is a competitor to that.
Many people mistakenly believe that the scores they see on Credit Karma or Credit Sesame are FICO scores, they’re actually VantageScores.
What's the difference between a VantageScore 4.0 and a FICO Score?
FICO gives weights based on these criteria
Payment history is 35%
Amount Owed is 30%
Length of Credit History 10%
Credit Mix 10%
New Credit 10%.
Whereas VantageScore gives weights on these criteria:
The most influential are: Payment history, Age and credit type, Percent of credit used
Medium influential: Total balance & debt
Least influential: Recent credit inquiries, available credit.
What does VantageScore 4.0 mean?
This is the latest credit model, the main differences compared VantageScore 3.0 are 1) High credit utilization will now affect your score, 2) Unpaid medical costs will (depending on length) will have less/no impact to your score, and 3) Tax liens and judgements will have less impact that before. This can be welcome news to those who have had health issues and health-related costs and debts.
Should I be concerned that I’m looking at VantageScore 4.0?
No, the Vantage scores will probably not differ significantly from FICO score. They are using many of the same characteristics as noted above - the goals are the same.
The bottom line
Credit scores are important and the number of factors can be dizzying. The most important thing to remember is that rather than focusing on any specific portion of the score (for example “inquires”) it is a better use of time to adopt credit positive habits (paying back debts on time, not having too high utilization, reducing debt) which will help to increase your credit score over time. No matter where you start from, there are good habits that one can adopt to increase their score.