Why you need to know your VantageScores

Until recently, FICO was the only credit scoring formula that mattered. Now the leading score has a real rival: the VantageScore.

Earlier this year VantageScore Solutions announced that nearly 1 billion of its scores were used in 2014. More important, another 3 billion scores were requested by lenders for testing and modeling purposes.

"That's essentially the calm before the storm, as that kind of activity indicates more adoption," said CreditSesame credit scoring expert John Ulzheimer, who has worked for both Fair Isaac (FICO), which created the FICO score, and credit bureau Equifax (EFX). "They've solidified themselves as FICO's primary competitor, which isn't a bad place to be."

Which factors impact your credit score?

When the three credit bureaus introduced VantageScore in 2006, many industry experts were skeptical the new score could unseat the mighty FICO or even survive where many other rivals had failed.

Indeed, FICO still dominates the industry, with 11 billion scores pulled in 2014. It's used in 90 percent of all lending decisions, according to Fair Isaac, and by 90 of the 100 largest financial institutions. And if you're getting a mortgage, FICO is pretty much the only game in town, as it's the credit score approved by the government-sponsored enterprises that buy most mortgages -- Fannie Mae and Freddie Mac.

But VantageScore Solutions is working to convince the GSEs to approve its scores for evaluating applicants and pricing loans for sale to investors. In the meantime, the company has forged relationships with a number of consumer credit sites that allow people to view their VantageScores 3.0 for free from one or more of the three major credit bureaus:

  • CreditSesame gives away VantageScores drawn from TransUnion data
  • MyBankrate and Quizzle distribute VantageScores using Equifax data
  • CreditKarma offers two VantageScores, one each from Trans Union and Equifax
  • Credit.com offers VantageScores from Experian

Free FICO scores are somewhat harder to get, although they're now offered by some credit card issuers including Discover, Barclaycard and Chase. FICO 8, the most-used version of the score, is available for $19.95 each from MyFICO.com, which also includes various other versions of the score, such as those used by mortgage lenders and engineered for credit cards and auto lenders.

You may not need to know, or track, all of these different numbers. Since VantageScore weights credit factors somewhat differently than the FICO, though, you may want to take an occasional peek at both types of scores to get a better understanding of how lenders may view you.

  • Liz Weston

    Liz Weston is a columnist at NerdWallet, a personal finance website, and author of "Your Credit Score." Email: lweston@nerdwallet.com. Twitter: @lizweston.