The Vantage score, a new comer to the credit scoring business, was developed in 2006 by a joint venture between the three largest credit bureaus; Equifax, Experian, and TransUnion. The joint venture is named VatnageScore LLC.
A formula that includes several variables is used to calculate the 3 digit score, which ranges from 501 to 990. The score also uses a lettering system (A-F), like a report card. Experian is currently the only company that directly provides the Vantage credit score.
The score is used by creditors to determine the credit worthiness (or risk) of a person. A low score means the individual is a high credit risk, while a high score means the person is a low risk.
The Vantage score consists of six main categories. Each is mentioned below with a brief explanation. A more in depth explanation should be widely available via the internet.
Payment History
The payment history makes up 32% of the Vantage credit score. This is why paying bills on time is so important. Paying bills habitually late or not paying at all will severely hurt one's score.
Debt Owed
Debt owed accounts for 23% of the credit score and covers a wide range of items. Types of debt (credit cards, mortgages, etc.), the balances of those debts, and the number of open credit accounts all factor in. Having high credit limits with low balances or five years left to pay on a 30 year mortgage will help raise the credit score. Having too many credit cards or owing near the limit of the cards will lower the score.
Balance
Current and overdue balances account for 15% of the score. Recent hikes in balances can cause the score to lower.
Credit History Age
The age of the accounts represent 13% of the score. Having older accounts will help raise the score.
New Credit
The number of new accounts recently opened account for 10% of the Vantage score. If several accounts were opened within the last few months, the score will probably drop. This is due to concerns that the new payments will not be made or will be late. Over time, if the payments are made on time, the positive will balance out the initial negative from opening the accounts.
Available Credit
Available credit accounts for 7% of the score. Having high credit balances along with low utilization helps higher the score.
