Last Updated: January 8, 2019

Breaking Down the Vantage Credit Model

In this guide, we will take you through all the components of the Vantage credit scoring model.

Keep in mind that your bank may be using a different model with slightly different weightings however, the tips in this guide will still apply to you.

What is the Vantage score?

Vantage is a collaboration between three  American credit rating agencies Experian, TransUnion, and Equifax.

Vantage was created to be a more accurate credit scoring model and has grown in popularity among lenders.

Your Vantage score is between 300-850 just like traditional credit scoring models.


Payment History – 40% of your score

Paying the minimum payment still counts as paying on time and will not hurt your score.

The credit card company only reports to credit bureaus if you have been paying as agreed or not. Paying the minimum balance counts as paying as agreed. Even though your score isn’t negatively affected you are still wasting lots of money paying interest at 12%-30% a year.

Pro Tip for Paying down debt: If you sometimes have trouble paying your minimum balance and currently have more cash than the minimum but less than your total credit card balance, only pay the minimum each month. Save the excess cash until you can pay off the money you borrowed in full. You will avoid a $30+ monthly late payment this way, maintain your credit score, and continue to save towards paying off your debts. It’s a Win Win Win!

If you are late on your payment by less than 30 days it will not impact your credit score but you will likely have to pay a late payment of $25-$35 every time. Credit card companies are only allowed to report late payments to credit rating agencies if they are 30 days or more past due.

  • 30 Days Late: 60-100 point drop (10%-15%), on your record for 2 years
  • 60 Days late: 100-160 point drop (20%), on your record for 2 years
  • 90 Days Late: 125-180 point drop (25%), on your record for 7 years
  • At 180 days the credit card company has likely written off your debt and sold it to a collection agency. Your score is down by up to 200 points.

You Have 2 Choices at This Point

  • Ignore this debt and your score will recover gradually over the 7-year period (though you will be harassed by debt collection agencies potentially for the full 7 years).
  • Wait until you have the cash to pay the debt off completely with the collection agency. The new scoring models from FICO and VantageScore ignore collections that are marked as paid and your score will immediately improve by fully paying off old debts. Partially paying off old debts will not benefit your score.

Bankruptcy as a Last Resort

Your last option if you are under a mountain of debt, is to file for bankruptcy. This will decrease your score by 200-400 points, will remain on your record for 7-10 years and regardless of your prior score will drag you down below 550 into the ‘poor’ scoring bucket.


Other Important Late Payment Tips

  • Late payments will reset your interest rate to a penalty rate (as high as 29.99% for some cards).

Note: If you make on-time payments for 6 months (the minimum payment counts too) the lender must reset your rate back to the pre-penalty rate. Don’t forget to remind them!

  • If you have a balance with an introductory 0% rate, a late payment will reset it to a penalty rate of 20%-30%.
  • Failing to pay the minimum payment each month allows the bank to charge you up to 10% of the outstanding balance in late fees (though it’s usually 2%-3%).
  • You can also lose any rewards you have earned depending on the language in your contract.


Age and Type of Credit – 20% of Your Score

  • The more varied the types of borrowing you do (car loan, credit card, and mortgage loan) the scoring agencies think of you as more experienced with credit.
  • The Vantage model takes an average age of open accounts but places the most weight on the age of your oldest account. If you are going to close a card, try to close the newest card first or at least leave your oldest card open.
  • The longer your history of paying back the money you borrow on time, the more the banks will trust you. The more they trust you the more money you can borrow (higher credit limit).

Bottom Line

This metric is largely out of your hands so don’t worry about it too much. Just remember to always keep your oldest credit card open and this score will improve over time.


Credit Utilization – 20% of Your Score

  • The higher your utilization rate, the greater risk that you will default in the next 2 years, according to the rating agencies. This ratio really spooks the credit scoring models and counts for up to 20% of your score.
A general rule is to never borrow more than 30% of your credit limit in-between payments.
  • The scoring model gives different points to different buckets of utilization, so 5% utilization would get 300 points, 15% would get 290 points and so on.
  • If you move from 30% utilization worth 260 points to 40% which is worth 200 points your score will decrease gradually until you have lost the full 60 points.
  • If you use up all of your available credit (100% utilization) it will drop your score faster and by more points than high utilization alone.
  • Asking for a higher credit limit from your credit card provider will make it easier to stay under the 30% ceiling (keep in mind this will be a ‘hard inquiry’ and will drop your score by 5-10 points.
  • Staying under the 30% will more than offset the hit to your score from asking for a higher limit.
  • Going above 30% hurts your score more the fewer years you have of credit history.
  • This metric also considers how much of an installment loan you have paid down. If you originally owed $30K for a car and have paid down $20K already, your score will be higher than if you have only paid down $5K.
Pro Tip: Try to spend a little money (even $20) each month and pay it off because a zero balance is seen by the scoring models as higher risk than even a 1% utilization. This is because no activity on the card signals you have little or no experience with credit so you could be a risk.

The more times you prove you will pay off your balance each month the less of a risk you are to your credit card company.

  • If your credit limit is just too low and you are maxing out your card but paying it off in full every month you should request a limit increase from your bank to bring your utilization down to apply for a new card.
  • Sometimes the bank will increase your limit automatically, hoping you will carry more debt so it can earn more interest.
  • A larger credit limit benefits your score because the same level of spending uses less than 100% of your available credit, something credit rating models like.

Note: If you are above 30% on one card but below 30% when adding up all of your cards, it will largely offset the negative mark from the one card over 30%.

Pro Tip: Call your credit card customer service and ask them what date they report to the credit bureaus each month. You may be able to run a higher utilization than 30% for most of the month, but as long as you pay down your card below 30% before the reporting date, your utilization will look pretty good to the credit bureau. Test this out for a month and if your score is getting worse just stick with less than 30% at all times.


Total Debt Outstanding: 10% of Score

This metric looks at how much debt you have compared to other borrowers. There is not one number that is good or bad, it all depends how you compare to everyone else.

  • In general, the less debt you owe on a credit card the higher your score will be.
  • This rating does not like high credit card debt, but does not necessarily think of a large home loan as bad.

The more you have paid down on a loan the better your rating: For example, if you took out a $30,000 car loan 2 years ago and have paid off $15,000 so far, you will have a higher score than someone who has only paid off $1,000 of their loan.

Bottom Line

The utilization rating will be as high as possible if you keep your credit card spending below 30% of your limit, or at least keep your credit card debt owed as low as possible. If you have other debts such a house, car or a student loan, pay your debt off over time and this score will naturally improve.


Inquiries/New Accounts – 5% of Your Score

What is a Hard Inquiry?

When a lender checks your credit report after you have authorized them to do so. Applying for a home, car, personal, or student loan is always a hard inquiry as is applying for a credit card (even if you have been ‘preapproved’).

What is a Soft Inquiry?

When the credit card company checks your credit report without asking your permission first.

Pro Tip: If you are shopping around for a car, student, or home loan try to do it all at once. Most scoring models count all hard inquiries made in a 14-day period as only 1 inquiry.

Examples of Hard and Soft Inquiries

Hard Inquiries Soft Inquiries
Usually Usually
*Apply for an Auto Loan *Checking Credit Score
*Apply for a Credit Card *Pre-approved Credit Card Offer
*Apply for a Mortgage *Background Check
Sometimes Sometimes
*Applying to rent an apartment *Applying to rent an apartment
*Verification of identity by *Verification of identity by
a credit union or stock brokerage a credit union or stock brokerage
*Renting a car *Renting a car
*Getting a cable or internet account *Getting a cable or internet account
*Opening a checking, savings account *Opening a checking, savings account
*Requesting a credit limit increase
*Signing up for a cell phone contract

New Account Specifics:

  • Opening a new credit card account is a hard inquiry on your credit and will lower your score by 5-10 points and remain on your credit report for 2 years.
  • Regardless of what rumours you heard, closing an account WILL NOT LOWER your score as long as the account has been fully paid off.
  • Closing an account can be bad for your score if it increases your credit utilization, so do the math and make sure you have enough credit left over to spend less than 30% of it in any one month.
  • Having more cards may lower your score in the short-term but if your credit utilization is lower your score will eventually be better off so don’t worry too much about opening a new card once a year or so if you want better rewards.
  • You can close an account that has a balance, but you still owe that money to the credit card company. You just lose use of the benefits. Some people use this method to stop themselves from accumulating additional debt.


Total Available Credit – 5% of Your Score

Plenty of available credit, compared to the amount you owe, shows lenders that you are managing your finances responsibly.

  • The credit card companies don’t want you to borrow every cent you can as it both increases the amount of money they could lose and puts you at greater risk for running into money problems in their view.
  • Consumers with the best credit score have an available credit limit of $21,000 on average.
As a rule of thumb, your available credit should be 4x the amount you spend on your card every month. If you spend $1000 a month on credit cards, having a $4,000 credit limit should be enough.

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