At a Glance
If you’re someone who’s conscientious about maintaining a good credit score, you’ll want to know what factors are considered for a good VantageScore. While there’s no hard and fast answer to the question, VantageScore considers a variety of factors to determine whether you’re a good bet for lenders. Payment history, credit utilization, and length of credit history are all essential components used in calculating your VantageScore. Additionally, other factors, like the types of credit accounts you hold and recent credit inquiries, can also affect your score.
In this article, you’ll learn:
The average credit score of residents of Mississippi, which is the lowest in the country.
What is VantageScore?
VantageScore is a credit scoring system that was introduced in 2006 as a joint venture between the three major credit reporting bureaus, Equifax, Experian, and TransUnion. It uses a similar scoring scale to the FICO score (300 to 850) and is designed to help lenders make credit decisions by predicting a borrower’s likelihood of repaying a loan or credit card balance.
One of the key differences between VantageScore and FICO is that VantageScore uses a slightly different algorithm to calculate scores, which takes into account a broader range of credit data. This includes data from alternative credit sources, like rent and utility payments, which may not be included in traditional credit reports.
VantageScore also places a greater emphasis on the most recent credit history, as well as a borrower’s overall credit utilization rate, which is the amount of credit being used compared to the total available credit limit. This can be beneficial for borrowers who are actively working to improve their credit, as it rewards them for making timely payments and reducing their overall debt load.
What is a good VantageScore?
A good VantageScore would be one that falls within the range of 661 to 780. This range is considered “good” by most lenders and indicates that the borrower is likely to be approved for credit with favorable terms and interest rates.
Related: What is a Good Credit Score?
Why is a good VantageScore important?
A good VantageScore is important because it can impact a borrower’s ability to access credit and secure favorable terms and interest rates. Lenders use credit scores, including VantageScore, to assess a borrower’s creditworthiness and ability to repay debt.
A good VantageScore indicates that the borrower has a strong credit history and is likely to repay their debts on time, which makes them a lower risk borrower. This can make it easier for borrowers to access credit, like loans, credit cards, and mortgages, and may result in lower interest rates and more favorable terms.
On the other hand, a poor VantageScore can make it more difficult for borrowers to access credit or result in higher interest rates and less favorable terms. This is because lenders view borrowers with lower credit scores as higher risk and may be less willing to extend credit or offer competitive rates.
How to get a good VantageScore?
Here are some steps you can take to improve and maintain a good VantageScore:
- Pay your bills on time: Late or missed payments can have a negative impact on your credit score. Make sure to pay all of your bills on time each month, including credit card bills, loans, and utilities.
- Keep your credit card balances low: Your credit utilization ratio, which is the amount of credit you’re using compared to your credit limit, can impact your credit score. Try to keep your credit card balances low and pay off your balances in full each month if possible.
- Monitor your credit report: Regularly check your credit report to ensure that there are no errors or fraudulent activity that could negatively impact your score. You can get a free credit report from each of the three major credit bureaus once a year at AnnualCreditReport.com.
- Use credit responsibly: Only apply for credit when you need it and can afford to make the payments. Avoid opening too many new credit accounts at once, as this can negatively impact your score.
- Maintain a mix of credit types: Having a mix of credit types, like credit cards, loans, and a mortgage, can help improve your credit score as it shows that you can manage different types of credit responsibly.
Related: How to Improve Your Credit Score?
Other VantageScore ranges
In addition to the “good” VantageScore range of 661 to 780, here are the other VantageScore ranges and what they generally indicate:
- 300 to 600:Poor. This range indicates that the borrower may have significant credit issues and may have difficulty getting approved for credit or securing favorable terms.
- 601 to 660: Fair. This range indicates that the borrower may have some credit issues, but may still be able to access credit, although likely with less favorable terms and higher interest rates.
- 781 to 850:Excellent. This range indicates that the borrower has a strong credit history and is likely to be approved for credit with favorable terms and interest rates.
Related: Credit Score Ranges
The average VantageScore in the U.S. is around 698. However, it’s important to note that the average VantageScore may vary depending on the specific population being measured.
For example, the average VantageScore for consumers with a mortgage is typically higher than the overall average, as these borrowers tend to have more established credit histories and higher credit scores. On the other hand, the average VantageScore for consumers with limited credit histories or a history of late payments may be lower.
It’s also worth noting that while an average VantageScore can provide a benchmark for comparison, what matters most is how your score compares to the specific lender’s criteria and the credit scores of other applicants for the same loan or credit product.
It’s difficult to say which score is usually higher, VantageScore or FICO, as it can depend on various factors like the credit reporting agency, the specific credit scoring model used, and the borrower’s credit history and profile.
Both VantageScore and FICO use similar factors to calculate credit scores, like payment history, credit utilization, length of credit history, and credit mix. However, there are some differences in the way they weigh these factors and how they calculate scores, which can lead to variations in score results.
When looking at trends, the FICO score is often higher than the VantageScore. For instance, the average VantageScore in the U.S. is 698, while the average FICO score is 716.
The highest possible VantageScore is 850. This score represents an excellent credit history and demonstrates to lenders that the borrower is likely to be a low credit risk. However, it’s important to note that achieving a perfect 850 score is rare, and a score in the “excellent” range of 781-850 is still considered very good and can help borrowers qualify for favorable interest rates and loan terms.
Related: Highest Credit Score