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Understanding the VantageScore® 3.0 and how it differs from other scoring models

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    Quick insights

    • The VantageScore 3.0 model is used to generate your three-digit credit score.
    • There are several credit scoring models out there and lenders may pick and choose which kind to use based on their needs.
    • Your VantageScore considers several key factors that may overlap with the ones used by other credit scoring models.

    When you check your credit score, you may notice that it’s sometimes generated using the VantageScore 3.0 model. What is this model and how does it work? Let’s explore below.

    What is VantageScore 3.0?

    The VantageScore 3.0 model is a credit scoring model that was developed by the three main credit bureaus—Experian™, Equifax® and TransUnion®. Like other scoring models, VantageScore 3.0 is used to generate a credit score, a three-digit number that helps capture your creditworthiness, which helps demonstrate your ability to repay your debts.

    This model was developed to create a more consistent approach and is widely used by lenders, financial institutions (such as banks and credit unions) and landlords. VantageScore 3.0 has a credit score range of 300-850, which is similar to other scoring models. It’s also able to account for a larger consumer base as it may include those who are just starting out and have a thin credit file.

    VantageScore 3.0 accounts for several key factors when generating your credit score. Let’s detail them further.

    Key components of VantageScore 3.0

    Credit scores are comprised of several key components. For VantageScore 3.0, as of October 2024, these factors include:

    • Payment history: This is the history of a person’s ability to repay their debts on time, such as making credit card payments on their respective payment due dates.
    • Age and type of credit: This reflects the diversity of credit accounts, such as credit cards, mortgages and other lines of credit as well as the age of each of your accounts
    • Credit utilization: Your credit utilization ratio is the amount of credit you use against your total available credit.
    • Total balances/debt: This reflects the total amount of reported debt, such as credit card debt and mortgages.
    • Recent credit behavior and inquiries: This accounts for recently opened lines of credit and number of hard credit checks. When you apply for a line of credit, lenders run a hard credit check.
    • Available credit: This is how much total credit is currently available to you.

    Comparing VantageScore 3.0 to other scoring models

    While VantageScore 3.0 is widely used, there are other versions of the VantageScore that have come before and after 3.0. For example, VantageScore 2.0 is an older model that does not use the common credit score range and instead a range from 501-990. It also didn’t encompass as many consumers and didn’t detail as much of their behavior. Additionally, there exists the FICO® Score and VantageScore 4.0. Let’s review them below.

    VantageScore vs. FICO Score

    There are other scoring models that are also heavily used by lenders, such as the FICO® 8 Score. FICO varies from VantageScore in the following ways:

    • VantageScore only needs about one account in your credit report to produce a credit score. FICO generally takes longer, as you’ll need to have a credit account and activity that’s at least six months old.
    • FICO and Vantage both use the range of 300-850, but the way the scores are created differs. For example, VantageScore weighs credit utilization more heavily than FICO.

    Let’s compare the specific ways that VantageScore 3.0 and FICO categorize its scores below:

    VantageScore 3.0:

    • Excellent: 781-850
    • Good: 661-780
    • Fair: 601-660
    • Poor: 500-600
    • Very Poor: 300-499

    FICO Score 8:

    • Exceptional: 800-850
    • Very Good: 740-799
    • Good: 670-739
    • Fair: 580-669
    • Poor: 300-579

    VantageScore 3.0 vs. VantageScore 4.0

    VantageScore 4.0 is a model that was released in 2017, and differs slightly from 3.0 in several ways, including:

    • 4.0 uses trended data and predictive modeling to help determine a consumer’s credit behavior over time.
    • 3.0 accounts for public records such as tax liens and civil judgements, while 4.0 does not.
    • 4.0 uses machine learning and algorithms to help lenders understand a consumer’s level of risk, while 3.0 does not.

    While 4.0 may have some advancements, lenders may pick and choose which scoring models to use based on their specific needs.

    In conclusion

    Credit scores can vary based off the credit scoring model used. VantageScore 3.0 is widely used by lenders, but there are other models such as the FICO score that are used as well. While there is no “better” or “worse” model, it’s possible that your scores from each model vary due to the fact that their key components are weighted in different ways. Whatever model Is used to generate your score, you can use this score as a helpful indicator of your current credit behaviors and keep track of it over time.

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