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Understanding VantageScore and How to Improve Your Credit

At O1ne Mortgage, we understand that your credit score plays a crucial role in your financial health and your ability to secure a mortgage. In this comprehensive guide, we’ll explore what VantageScore is, how it compares to FICO scores, and provide actionable tips to improve your credit score. For personalized mortgage services, call us at 213-732-3074.

What Is VantageScore?

VantageScore is a credit scoring model developed by the three major credit reporting agencies: Experian, TransUnion, and Equifax. Launched in 2006, VantageScore aims to provide a more consistent and inclusive credit scoring system. The most commonly used versions are VantageScore 3.0 and VantageScore 4.0, with the latest model, VantageScore 4plus™, introduced in May 2024.

VantageScore Versions

• VantageScore 3.0: Released in 2013, this version uses a score range of 300 to 850 and does not consider paid collection accounts.
• VantageScore 4.0: Introduced in 2017, this version incorporates trended data, which considers changes and trends in your credit history over time.
• VantageScore 4plus™: The latest model allows lenders to consider additional data with your permission, providing a more comprehensive view of your financial behavior.

What Is a Good VantageScore?

A VantageScore ranges from 300 to 850, with a score of 661 or higher considered good. However, lenders may have their own criteria for what they consider a good credit score. Other factors such as income, debt-to-income ratio, and history with the company also play a role in lending decisions.

VantageScore vs. FICO Score

Both VantageScore and FICO scores are designed to predict the likelihood of a borrower becoming delinquent on a financial obligation. While they use similar data from your credit report, there are some differences in how they weigh various factors.

Score Range and Factors

Both VantageScore and FICO scores range from 300 to 850. However, FICO also creates industry-specific models for auto lenders and credit card issuers that range from 250 to 900. The factors considered in each model may vary slightly, but generally include payment history, credit utilization, length of credit history, new credit, and credit mix.

Why Your VantageScore Can Vary

Your VantageScore can vary based on several factors, including the version of the score, the timing of the score generation, and the credit report being analyzed. Different versions of VantageScore may weigh factors differently, and the data in your credit report can change over time, leading to variations in your score.

Do Lenders Use VantageScore?

Many lenders use VantageScore credit scores to evaluate credit applications, manage customer accounts, and make lending decisions. For example, Synchrony Bank uses VantageScore 4.0 for store credit card applications, and many mortgage lenders will start using VantageScore 4.0 in 2024 to comply with Federal Housing Finance Agency requirements.

How to Check Your VantageScore

You can check your VantageScore through your bank, credit union, lender, or credit card issuer. Personal finance websites also offer free VantageScore tracking. Additionally, you can obtain free credit reports from AnnualCreditReport.com, although these reports do not include a credit score.

How to Improve Your VantageScore

Improving your VantageScore involves similar steps to improving any credit score. Here are some actionable tips:

• Pay your bills on time: Timely payments are crucial for maintaining a good credit score.
• Keep your credit card balances low: Aim for a low credit utilization rate to positively impact your score.
• Keep old credit cards open: This helps maintain a low overall utilization rate and a longer credit history.
• Avoid frequent credit applications: Limit new credit applications to avoid negatively impacting your score.
• Use different types of credit: A diverse credit mix can improve your score.
• Avoid taking on too much debt: Ensure you can comfortably manage your financial obligations before taking on new debt.

Monitor Your Credit Regularly

Regularly monitoring your credit reports for changes and accuracy is essential. With Experian’s free credit monitoring, you can access your Experian credit report, receive monthly updates, and get real-time alerts about important changes. This service also includes a free FICO score and score tracking.

At O1ne Mortgage, we are committed to helping you achieve your financial goals. For personalized mortgage services and expert advice, call us at 213-732-3074. Our team of experienced loan officers is here to assist you with all your mortgage needs.

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