A VantageScore® is a credit score created by the three major credit bureaus Experian, TransUnion and Equifax. This score helps financial institutions, lenders and landlords determine a consumer’s creditworthiness.

Since VantageScore first came into the scene in 2006 there have been 4 models. The most common model VantageScore 3.0 was released in 2013. A newer model, VantageScore 4.0, was released in 2017, however, 3.0 remains the most popular version.

A good VantageScore credit score typically ranges from 300 to 850 points, with a good score falling in the 661-780 range. A good or excellent score can help consumers qualify for loans, receive lower rates, and be more likely to qualify for employment or a property rental.

Here’s a breakdown of how VantageScores 3.0 are calculated:

40% Payment History

A consumer’s payment history is one of the most influential factors in determining a VantageScore credit score. It accounts for 40% of your score. So, it’s important to make on-time consistent payments when building good credit.

21% Credit Age & Mix

A consumer’s credit type and age of accounts are other important influences on credit scores. Also, having a good mix of revolving credit and installment loans can help boost your score.

20% Credit Utilization

The percent of credit limit used, or debt-to-credit ratio is the second most highly influential data on your credit report and makes up 20% of your score. Keeping balances below 30% of your total available limits is important.

11% Account Balances

Your total outstanding balances account for 11% of your overall score, making it important to keep your accounts paid down as much as possible.

5% Recent Credit Applications

Lenders, landlords, or employers perform a hard credit inquiry can lower your score. Always ask for a soft pull in advance of a hard pull when seeking a new loan, because soft inquiries provide similar information without affecting your credit.

3% Available Credit

The amount of available credit may not rank high on the list, but it’s still a determining factor when it comes to having good credit. To boost your credit score, consider asking for a credit limit increase on your credit cards.

You can request a free credit report annually here. If your credit score is not as high as you’d like we recommend proactively managing your credit by following these tips:

• • Be sure to pay all your bills on time.
  • Remove inaccurate information by writing to the bureaus.
  • Keep your credit utilization below 30%.
  • Maintain a diverse mix of credit accounts.
  • Always request a soft inquiry before a hard inquiry.
  • Keep old accounts open.
  • Limit the number of applications you submit.

Lenders or mortgage brokers looking to improve their customer lifecycle with a fully-customizable loan prequalification solution should contact FPN to learn more about PreQual.