How and Why You Should Track Your VantageScore

Whether you’re looking to open a new credit card, finance a new vehicle or take out a mortgage, having a strong credit score is incredibly important. One common type of credit score is the VantageScore, which Alliant and many other financial institutions utilize. Learn what a VantageScore is, how and why you should track it and ways to improve your score if needed.

What you’ll learn about:

• What is a VantageScore?
• VantageScore vs. FICO score vs. credit score
• Improving your VantageScore
• Why your VantageScore matters
• Tracking your VantageScore at Alliant

What is a VantageScore?

VantageScore is a credit scoring model produced by a company of the same name (VantageScore Solutions, LLC) that is jointly owned by the three credit bureaus (Experian, Equifax and TransUnion). Your VantageScore ranges from 300 to 850 and reflects how lenders view your creditworthiness. A higher score is better, with the best rates and terms generally going to those with a score in the mid-700s and above.

VantageScore’s exact formula uses to calculate your score isn’t public information, the general method is known. The following aspects impact your VantageScore score and at what percentage:

• Payment history (40%)
• Depth of credit (21%)
• Credit utilization (20%)
• Recent credit (11%)
• Balances (6%)
• Available credit (2%)

VantageScore vs. FICO score vs. credit score

Despite the common term “credit score,” there is no singular, comprehensive credit score. While FICO was the original credit score model, that is no longer the case, with other scoring models like VantageScore emerging. Today, these two models remain the most used.

While each credit score model has slight variations on the formula used to calculate your credit score, the overarching factors remain the same. You can look at your VantageScore and feel confident that your creditworthiness score is accurate, even if a lender uses a different model.

Improving your VantageScore

One reason everyone should keep tabs on their VantageScore is so they can improve it if need be. While improving your VantageScore can be difficult, it’s also a relatively straightforward process. In fact, many platforms that provide your VantageScore will also suggest specific actions you can take to improve it.

Here are tips on improving each of the key credit factors used to calculate your score:

• Payment history (40%): Always pay your lines of credit on time. Even if you must carry a balance and pay interest, this option is far preferable to not paying and incurring late fees while dinging your credit. Set up autopay to ensure you don’t forget a payment.
• Depth of credit (21%): Lenders like seeing a variety in the type of credit accounts you use. The two main types of credit are revolving and installment. Revolving credit accounts have a spending limit but variable balance (like a credit card), while installment accounts have a predictable payment (like a mortgage or auto loan)
• Credit utilization (20%): Determine the total amount of available credit and aim to use no more than 30%. For example, if you have $15,000 in available credit across several credit cards, try to keep your total balances across those cards below $4,500.
• Recent credit (11%): When you apply for a loan or line of credit, a hard inquiry is made. Too many hard inquiries will lower your score. However, the VantageScore model groups all hard inquiries within 14 days as one inquiry, so you can shop around for the best rate and term without a significant impact on your score.
• Balances (6%): This category is calculated by looking at the total balances remaining on all your credit accounts, regardless of if payments are being made on time. While this category has a minor impact on your overall score, try to avoid a high overall balance.
• Available credit (2%): While this category only makes up 2% of your score, having a larger amount of available credit will have a slight positive impact.

Why your VantageScore score matters

Because your VantageScore reflects your creditworthiness to lenders, a good score results in a higher chance of approval for lending products like a mortgage. Additionally, you can expect significantly better rates and terms with a high VantageScore.

If you are considering taking out a loan in the near future, especially for a major purchase like a house or car, knowing your VantageScore score and taking steps to improve it if necessary, can put you in a much better financial position.

Tracking your VantageScore at Alliant

Thankfully, you don’t have to wait until you’re trying to take out a loan to know your VantageScore. Many financial institutions, including Alliant, offer free VantageScore updates.

To view your VantageScore as an Alliant member, log in to online or mobile banking and select the “Credit Score” option from the homepage. From there, you can view your VantageScore and see how it’s trending over time.

Additionally, Alliant will list the top factors negatively impacting your score so you can know what steps to take to improve it.