What is Vantage 4?

Do one thing: If you haven’t checked on your credit score in a year or more, or ever – now is the time. Most major credit card companies offer customers a free credit score. Plus, SavvyMoney users also have 24/7 access to their Vantage credit score.

When it comes to our financial lives, the more we know about our credit scores the better. Our score, of course, is a three-digit number from 300 to 850 that can help lenders and landlords decide if we are responsible enough to pay back a loan (or rent an apartment) and how much they should charge us.

History of VantageScore

First launched in 2017, VantageScore was developed together by the three largest credit reporting bureaus — Equifax, Experian, and TransUnion — to compete with the older FICO score, which was established by the Fair Isaac Corporation in 1989.

The number of lenders and other companies utilizing Vantage scoring models has continued to rise in recent years. Between July 2018 and June 2019, some 12.3 billion VantageScore credit scores were used by more than 2,500 users, according to a recent market study performed by consulting firm Oliver Wyman. In 2022, more than 3,000 businesses used more than 19 billion VantageScore credit scores, a 30% increase from 2021.

VantageScore 3 vs VantageScore 4

The main difference between VantageScore 4 and VantageScore 3 is that the newer score places more emphasis on an individual’s newer credit. Plus, less emphasis is placed on credit balances with VantageScore 4. According to company data, VantageScore 4 examines your credit behavior over a period of time, instead of taking a look at a single snapshot. This way, lenders can get a better idea if someone’s credit is improving over time.

Real Life Example

Here’s a real-life example to consider. If two people both have $12,000 credit card balances, but one has been continuously paying the balance down over time, and the other has been in a spending frenzy, the person whose balance is moving up is typically considered a greater risk. Unlike other models, the VantageScore 4 scoring model considers that behavior when tabulating scores.

What does that mean to you? If your credit report shows you are paying down debt or – even better – paying off your monthly balances in full, that should help bump up your Vantage 4 credit score. On the flip side, if you have been amassing credit card debt or opening new credit card accounts regularly, that could potentially hurt your score.

Why a New Version of VantageScore?

Among other things, VantageScore 4 was introduced to take into account how someone’s credit utilization changes.

• Credit Utilization Changes. Credit utilization is the amount of credit being used across all of your accounts compared to the amount of total credit available. Using such historic data, and not just a moment-in-time glance, can be beneficial for someone who can demonstrate they are making progress in paying down debts over time.
• Focus on On-Time Payments. On time payments – and how much more you pay toward the monthly minimum due – also are considered with Vantage 4. Why is that? As you may know, paying more than the minimum is a good sign for lenders, that makes you appear to be less of a credit risk.
• Access for More Individuals. Another advantage, is that VantageScore “has been able to provide an alternative credit reporting model that may be able to expand access for tens of thousands of potential borrowers.” Because Vantage 4 places a greater emphasis on people making on-time payments, those with thin credit files – who are often younger people – have a better chance at obtaining a loan. Data from VantageScore showed that some five million additional borrowers were able to secure a mortgage financing because of Vantage 4.

The Bottom Line

While it’s good to understand what scoring models are being used, most people who borrow money or rent a new place won’t know what company – VantageScore or FICO – is providing the credit score for the transaction. And that’s really okay. Different types of lenders use different versions of the scoring models. For example, a cellular phone company may use Vantage 3 to check your credit, while a mortgage lender might use a version from FICO.

The best way to prepare when applying for a new loan is to make sure your financial house is in order. That means paying all of your bills on time, every time and making more than the minimum payments as often as you can. (Paying your credit card bills off every month is even better.) Do that, and you will be well on your way to a more financially healthy future.

With reporting by Casandra Andrews