VantageScore 3.0 Goes Head to Head with FICO Score


A lesser-known credit score may finally become a major contender, thanks to a significant revamp.

Most consumers are probably only aware of one credit score, the ubiquitous FICO score.

But another widely used credit score, known as VantageScore, has been around since 2006.

It was created by the three major credit bureaus to compete with FICO, but until now it has done little to grab market share.

That may change with their latest release known as “VantageScore 3.0.”

New Range and Better Coverage of Thin-Credit Consumers

vantagescore 3.0

Perhaps the most notable change to VantageScore is its credit score range, which is now the same as FICO’s, 300 to 850.

Before this update, VantageScores ranged from 501 to 990, which probably made consumers confused and/or less interested in the credit-scoring model.

Aligning it with FICO’s range is a smart move, and likely the result of FICO’s failed attempt to patent their scoring range a few years back.

Additionally, VantageScore 3.0 comes with a thirteenth “scorecard,” which allows for a predictive credit score for those with little to no recent credit activity.

The company believes the new algorithm will be able to score somewhere between 27 and 30 million previously unscoreable consumers.

This is accomplished by factoring in non-tradeline credit data, such as credit inquiries, collection accounts, and public records. Or by using rent, utility, and telecom data, assuming it’s present in a consumer’s credit file.

The new scoring model also uses tradeline data that is more than 24 months old if it contains predictive qualities, which should benefit infrequent users of credit.

Up to 25% Predictive Improvement

For prime and near-prime consumers, the groups most lenders focus on, the VantageScore 3.0 model achieves up to 25% more predictive power.

It accomplishes this by using more granular data from 45 million anonymous credit files (15 million from each of the three bureaus) and blending multiple time frames of data.

And from 900 behavioral characteristics tested, VantageScore took the 150 most predictive to ensure the best performance for its new score.

For example, VantageScore 3.0 differentiates first mortgages from other mortgage related transactions, such as second mortgages and home equity lines, and can identify student loans from other installment accounts.

This provides the company with a better overall picture of a consumer’s credit history and corresponding default risk.

Additionally, the new model comes with more specific delinquency and default time frames that better assess consumer payment behavior.

The resulting numbers look good – 80% of consumer scores are within 20 points across all three credit bureaus.

[Why do credit scores differ?]

And there is a near-identical risk alignment across all three bureaus, meaning it shouldn’t matter what credit bureau’s data is accessed to come up with a VantageScore.

This is important, as FICO scores can display a huge range if different data is present, leading to widespread fluctuation and misrepresentation.

Seeing that all three major bureaus are involved with VantageScore, your three credit scores should be a lot more similar.

Finally, VantageScore 3.0 includes special treatment for victims of a natural disaster.

In the past, credit score providers have used special reporting codes to indicate if a natural disaster has had an affect on a credit account.

But this meant both positive and negative information was absent from a consumer’s credit score calculation. With VantageScore 3.0, only negative information will be omitted.

Reason Codes Made Simple

Speaking of reporting codes, VantageScore also launched a new website called, which aims to explain reason codes in layman terms.

Reason codes are those one-liners that show up on your credit report, explaining why your credit history may not be flawless.

For example, reason code “12” says, “The date that you opened your oldest account is too recent.”

As a rule of thumb, creditors don’t like consumers who have opened too much recent credit, as it indicates possible distress.

Or reason code “16,” which says, “The total of all balances on your accounts is too high.”

Again, you’re seen as a higher default risk if you’ve got a lot of outstanding credit, or more than the average U.S. consumer.

So now if you see these reason codes on your credit report, you can mosey on over to that website and make better sense of it all, and take steps to improve your credit score based on the information found.

Watch out FICO, VantageScore is looking like a serious contender at long last.

By Colin Robertson

Colin created this blog after spending several years in a job that required him to scour credit reports on a daily basis. His goal is to help individuals better understand their credit and get the most out of credit cards.

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