Consumer Comeback Blog

How the New VantageScore 3.0 Will Impact Your Credit

Written by Jeffrey Trull

VantageScore-30-infographic-thumbThink you have just one credit score? While it’s true that the popular FICO score is the most talked about, the new VantageScore 3.0 brings some changes to the credit world. The update changes how scores are calculated as well as assigns scores to millions of consumers that currently lack one.

VantageScore was created by the three major credit bureaus — Equifax, Experian, and TransUnion. If you haven’t heard of VantageScore before, it’s still possible it may have been used when you applied for credit. Currently seven of the top 10 financial institutions use it, along with six of the top 10 credit issuers, four of the top 10 auto lenders, and four of the top five mortgage lenders.

The big news for consumers: this score may change your creditworthiness in a variety of ways. Here’s how:

Paid or settled collections debt ignored

A rather-revolutionary stance of the new VantageScore is that any debt that’s paid off or settled in collections won’t be factored in.

This is big news for consumers who may have had problems with debt collection in the past. Settlements or debt paid off from collections stay on your credit report for seven years and typically have a negative impact on credit ratings. With the new VantageScore, this is no longer the case.

Updated natural disaster standards

Natural disaster victims are given special exceptions when these emergencies affect their credit. The problem: while this special designation blocked negative information, positive behavior was also not counted.

Now, consumers get the best on both ends. Negative information with a natural disaster code is still ignored, but positive remarks can benefit storm victims, making their recovery potentially easier.

More consumers will have credit scores

Not everyone is eligible for a credit score. For FICO, there are specific requirements, which are listed on the myFICO site as:

  • At least one account that has been open for six months or more
  • At least one undisputed account that has been reported to the credit bureau within the past six months
  • No indication of deceased on the credit report (If you share an account with another person this may affect you if the other account holder is reported deceased)

The new VantageScore aims to make getting a credit score easier. VantageScore 3.0 will allow 27-30 million consumers formerly unable to receive a credit score to now have access to one. This goal is to allow this new pool of consumers access to better borrowing rates and products that require a credit score.

Rent and utility payments included

The new score will allow other payments, like for rent and utilities, to count towards calculation of the VantageScore. This change benefits consumers with limited credit history and who pay other monthly bills on time.

Of course, for this change to have any effect, rent and utility payments must be reported to credit bureaus. For many consumers, that’s not currently the case for monthly rent payments if you don’t rent from a property management company. According to the Experian website, individual landlords can still report on-time payments that count towards your credit if they decide to enroll in a compatible rental payment service.

New scoring aligned with FICO

The VantageScore has realigned its scoring system with a range of 300-850 to match the FICO score. Previously, the VantageScore used a scale of 501-990, which made understanding a score and comparison with FICO confusing. This change makes it easier for lenders to adapt their systems to the VantageScore as well as less tricky for consumers, too.

Reasons codes defined

VantageScore has launched a new site,, to help consumers understand reason scores given with credit decisions and on reports. Consumers can simply type in their particular reason code to find out more for their particular codes that may show up on statements or their credit reports.

Still limited in use

Despite these changes, it’s not likely to completely change the credit landscape for consumers. The main reason is that not all lenders and institutions use VantageScore, as the majority still rely on its competitor, FICO.

As mentioned above, around half of the institutions in each category use the VantageScore currently. However, these changes may position the VantageScore to gain a larger share of the market.