Credit scores can have a huge impact on a person’s financial life. They can be the difference between being approved for a new loan or credit card or being denied.

Plus they can play a vital role in determining the interest rate you’ll receive on nearly any loan. So what are the best ways to keep yourself up to date on your credit scores? You have options.

First, there’s Credit Karma, where you can get your free VantageScore 3.0 credit scores from TransUnion and Equifax. VantageScore is a different scoring model than FICO, but it’s still a good way to gauge your credit standing.

Another option is to seek out your FICO® scores — scores based on credit-scoring models created by the Fair Isaac Corporation (“FICO” … get it?). And fortunately, you can access your FICO scores for free in several different places.

What’s the difference between VantageScore and FICO?

The major difference between VantageScore and FICO is the scoring models they use to determine your credit scores. The scoring models are largely based on your credit reports. While they look at similar factors when calculating your scores, different factors — like credit usage, payment history, credit types and more — can be weighed differently. VantageScore is a collaboration between the three main consumer credit bureaus: Equifax, Experian and TransUnion.

How you can get your FICO® scores free

FICO works with more than 200 financial institutions to provide free access to FICO scores for consumer accounts. If you’ve found yourself asking, “What’s my FICO score?”, walk with us through six ways that you can get your FICO scores for free. Since there’s no hard inquiry with any of these options, checking your FICO score won’t have a negative effect on your credit for any of the six ways on our list to access your FICO scores for free.

1. Discover
2. American Express® credit cards
3. Citibank® credit cards
4. Bank of America
5. Credit unions
6. FICO

1. Discover

While you are working to build your credit, you can use Discover to help track your FICO score.

In addition to having access to your free FICO credit score each month, you’ll be able to learn more about the factors that make up your scores. Discover can help you dive into the things that are helping your credit score, as well as what might be keeping your score down.

2. American Express® credit cards

American Express gives cardholders access to their free FICO score. The FICO score provided is based on your Experian® credit report. Your FICO score is available through your online American Express account and gets updated periodically.

3. Citibank® credit cards

Another credit card issuer that will provide your FICO score for free (for select Citi cards) is Citibank. Scores are based on your Equifax® credit reports and they update on a monthly basis.

4. Bank of America

Bank of America offers eligible cardholders free access to their FICO score. The score provided is based on your TransUnion® credit report and updated each month. Plus you will also have access to a couple of useful charts.

The first tracks your recent scores over time, so you can see how you’ve been performing month to month. This can be helpful if you’ve been working to boost your credit. The second chart will show national FICO score averages. This allows you to compare your score against others.

5. Credit unions

If you don’t like using credit cards, another option for getting your FICO scores for free is through a credit union. Not all of them offer this benefit, but if you belong to one, it’s worth checking. A couple of larger credit unions that offer free FICO scores are Navy Federal Credit Union and DCU Credit Union.

6. FICO

You can sign up for a free account on myFICO.com to access your monthly FICO score based on your Equifax credit report.

Next steps

Understanding your credit scores, including your FICO credit scores, plays a big part in getting a handle on your overall financial health. Your credit scores could affect your borrowing costs when you purchase a new car or home, for example. With so many different ways to access your FICO scores for free, you have the ability to stay informed and make any necessary changes to help ensure a strong financial future for yourself.

Most people associate credit scores with FICO, and with good reason. And while there are many credit scoring models out there, the other main scoring model is VantageScore®.

The Fair Isaac Corporation (formerly Fair, Isaac and Company) introduced the first general-purpose credit score in 1989, and FICO® credit scores have been used in a wide range of lending decisions ever since. But FICO® scores aren’t the only credit scores you’ll see. The other main scoring model is VantageScore®, the third version of which — VantageScore 3.0 — is widely used today.

• What is VantageScore 3.0?
• At a glance: VantageScore 3.0 vs. other scoring models
• How is your VantageScore 3.0 calculated?
• How does VantageScore 3.0 compare to FICO models?
• What is the difference between VantageScore 3.0 and VantageScore 4.0?

What is VantageScore 3.0?

As we mentioned, VantageScore 3.0 is the third version of the alternative credit score model to FICO. But to fully understand how the scoring model works, let’s take a quick step back.

It all started in 2006, when the three major consumer credit reporting bureaus — Experian, TransUnion and Equifax — teamed up to create the first iteration of the VantageScore® credit scoring model.

VantageScore went through several versions before VantageScore 3.0 debuted in 2013. The new model became so successful that approximately 40 million Americans who had previously been without a credit score are now able to get one, according to VantageScore.

The fourth and latest version of the VantageScore® model, VantageScore 4.0, debuted in 2017, but many lenders continue to rely on VantageScore 3.0.

With that in mind, let’s review some of the basic information you should know about how VantageScore 3.0 works and how it differs from other credit scoring models.

At a glance: VantageScore 3.0 vs. other scoring models

How is your VantageScore 3.0 calculated?

VantageScore 3.0 credit scores range from 300 to 850. Earlier iterations of the VantageScore® model featured a different range, but VantageScore 3.0 adopted the 300 to 850 range — the same range as most FICO® scores — to make it easier for lenders to use.

Though individual credit scores are based on a complex series of calculations, VantageScore does offer some insight into how the various credit factors are used to calculate a VantageScore 3.0 score.

Generally, here’s how the categories can break down.

Image: ccupdateutilization-vantage-2

Payment history (about 40%)

The biggest factor in your VantageScore 3.0 credit scores is payment history. In other words, are you consistently paying your bills on time, or are you frequently delinquent on your accounts?

Payment history is typically represented as a percentage showing how often you’ve made on-time payments. Given the weight of this factor, late or missed payments have the potential to significantly harm your credit scores.

Age and type of credit (about 21%)

VantageScore 3.0 also factors in how long you’ve had different types of credit accounts open. (Don’t worry — it doesn’t refer to your actual age.)

Ideally, lenders like to see long-term, established lines of credit. Having a variety of account types is a bonus — as long as you stay up-to-date on your payments — as lenders also typically like to see that you’ve used a mix of accounts on your credit responsibly.

Credit utilization (about 20%)

Credit scores are intended to help lenders get a clearer picture of the type of borrower you might be. That’s why they want to see you using a small percentage of your available credit at any given time. Experts generally recommend a credit utilization ratio of below 30%.

Balances (about 11%)

This factor refers to the total amount of recently reported balances (current and delinquent) on your credit accounts.

Lenders generally like to see low balances on your other credit accounts, as it suggests the chances of you making on-time payments each month is higher. Though the best method is to pay off your balances monthly.

Recent credit (about 5%)

Have you applied for a new credit card lately? Maybe taken out a personal loan? Lenders may want to know these types of things, as your recent credit activity, including recently opened credit accounts and credit inquiries, can be an indicator of future financial performance.

Available credit (about 3%)

Although not a huge factor, lenders typically like to see that you’re only taking out the credit that you need.

How does VantageScore 3.0 compare to FICO® models?

There are many similarities between the VantageScore® and FICO® credit-scoring models. Not only are both typically calculated on a 300-to-850-point scale (newer FICO® scores may range up to 950), but both models put a lot of emphasis on payment history and credit utilization.

For the sake of comparison, let’s take a look at how FICO weighs various factors in your credit scores. Some of these factors may have slightly different names from what we referenced above, but they refer to similar information in your credit reports.

Image: ccupdateutilization-fico-3

• Payment history: 35%
• Amounts owed: 30%
• Length of credit history: 15%
• New credit: 10%
• Other factors, such as types of credit used: 10% 

While much of the information is comparable, one big difference may lie in how VantageScore and FICO evaluate data in order to generate scores, particularly for people without much credit history.

If you have little credit history, there’s a good chance you might not have a FICO® score. FICO requires at least six months of account data reported to a credit bureau within the past six months before a score can be established.

VantageScore, on the other hand, might be able to provide more people with a credit score by using just one month of history on at least one account reported within the previous 24 months.

Do you have a collection account on your credit reports? VantageScore may be a little more forgiving to your situation. Unlike the FICO® 8 credit scoring model, VantageScore 3.0 will ignore any collections account that has been paid in full. (FICO® 9 also ignores any collection account that is paid in full.)

What is the difference between VantageScore 3.0 and VantageScore 4.0?

Over time, VantageScore Solutions has adjusted its credit scoring model to better reflect consumers’ overall credit profile.

In 2017, VantageScore announced a new version of its credit scoring model: VantageScore 4.0. This new model introduces several changes that could affect your credit scores.

Here’s a summary of some of the important changes VantageScore 4.0 brings to the table.

Trended credit data

Typically, credit scores have only been able to take a snapshot of your credit reports based on how they look at a specific period of time. VantageScore Solutions claims that VantageScore 4.0 is the first and only credit scoring model to use trended data from the three major consumer credit reporting bureaus — meaning it could offer deeper, more-accurate insight into your borrowing and payment patterns.

Jeff Richardson, vice president of marketing and communications with VantageScore® Solutions, offers an example: A consumer might accumulate debt around the holidays and then purchase a new car in January. In the short term, that consumer might look like a high-risk borrower. However, going back over a longer historical period, as VantageScore 4.0 purports to do, might tell a different story. The end result could be a clearer picture of the borrower.

Tax liens, judgments and medical collection accounts might not hurt as much

In July 2017, TransUnion, Experian and Equifax adopted stricter requirements for collecting and reporting consumers’ tax liens and civil judgments. In light of that change, VantageScore 4.0 doesn’t rely as heavily on tax liens and civil judgments as some previous scoring models.

Credit scores for more consumers

VantageScore 4.0 could be welcomed by consumers with a thin or dormant credit history. VantageScore Solutions says the model leverages “machine learning techniques” to better develop scorecards for consumers with no update to their credit files in the previous six months.

The firm believes this will bolster VantageScore’s ability to accurately score 30–35 million consumers neglected by traditional scoring models.

What’s next

When it debuted in 2013, VantageScore 3.0 added a new dimension to the credit scoring model. Its successor, VantageScore 4.0, similarly aims to provide lenders a better picture of consumers’ credit.

Richardson explains that with each evolution of its scoring model, VantageScore Solutions aims to bring three key items to the market: greater accuracy, greater reach and more consistency.

Credit scores are an ever-evolving concept, but knowing how different models incorporate credit factors can help you address any issues that may arise.