Skip to main content

Here's how a major change to a credit score model will affect you

It's good news if you have a history of paying down debt.
  • Author:
  • Updated:

Changes are being made to the way credit agencies calculate your credit score – and it's good news if you've got a proven history of paying down debt.

Later this year, VantageScore – a credit scoring model developed by the major credit reporting bureaus TransUnion, Equifax and Experian – will introduce its latest model, VantageScore 4.0, which will put more emphasis on something called "trended data."

This is designed to be fairer to people who have an established record of making credit payments on time, even if they have a lot of debt.

Who will this benefit?

Currently one of the major factors in your credit score is how much of your available credit you are utilizing.

Typically, if you're using more than 30 percent of your available credit (e.g. $3,000 debt on a $10,000 limit), this negatively impacts your credit score.

However, VantageScore's new methodology will take into account an individual's history paying off debt. So someone who makes regular payments on their credit cards won't be as badly impacted if they take on a lot of debt, compared to someone who piles on more debt and pays off smaller amounts.

As explains, the new model looks at how a consumer's credit balance changed over a period of months, rather than taking a "single snapshot in time" that doesn't show the full context of their spending and debt-paying behavior.

Why the change?

One of the main reasons this is being brought in, the Washington Post notes, is so it doesn't penalize consumers who have good credit scores but take a hit if they make a major, one-off purchase with their credit card, such as travel tickets.

A purchase like this could see them go above the desired "30 percent of available credit" mark, and their credit score could go down as a result – even if they were planning on paying the debt off in full, on time.

While the changes to VantageScore will benefit consumers when they apply for credit cards, loans and other forms of credit, it won't have an impact if you're applying for a mortgage, as most mortgage lenders rely on FICO scores.

The FICO score is still the preferred credit scoring model used by many lenders.

But since it was introduced in 2006, the VantageScore has been growing in stature, and in 2016 it was used by 2,400 lenders and 2o out of 25 of the largest financial institutions in the U.S. It uses the same 300-850 scoring range as FICO.

If you're looking for ways to improve your credit score, regular GoMN column The Tip Jar has put together this guide.

Next Up

Wayzata High School

Niche rankings identify best Minnesota schools, districts

Eden Prairie has schools ranked in both the private and public categories.


Walker, The Current announce end of Rock the Garden festival

The Walker Art Center and Minnesota Public Radio announced the festival will retire so the organizations can dream up new events.

Screen Shot 2022-09-28 at 9.05.52 AM

Able Seedhouse + Brewery in NE Minneapolis to close

The brewery and its onsite food truck, Animales Burger Co., will both be open for their last day on Saturday.

Lake Minnetonka

Police investigate spate of car break-ins on south Lake Minnetonka shore

The South Lake Minnetonka Police Department received reports that cars in Shorewood and Excelsior were broken into Tuesday morning.


1 dead, 3 injured in crash involving tractor and SUV

The man driving the tractor was killed in the crash.

University of minnesota sign

U of M gives some students 50% off meals for September after complaints

Students have complained about an array of issues surrounding dining halls.


Gallery: Sprawling estate near Superior National Forest listed for $2.9M

The property has been in the same family for over 60 years.

Screen Shot 2022-09-27 at 2.51.49 PM

Surgery clinic proposed to replace 111-year-old farmhouse in Eagan

A developer is proposing to transform the remnant farm property.

Hurricane Ian

Why Hurricane Ian could be catastrophic in Florida

Hurricanes are the atmosphere’s biggest show of force and energy, and Hurricane Ian is no exception.


Suspect arrested after man and dog shot on St. Paul's East Side

The shooting happened around 12:45 p.m. Tuesday.


Bemidji police appeal to find missing teenager

Tahlia Poitra was last seen Wednesday.


The Tip Jar: Why your credit score matters, and how to boost it

Want a mortgage? You'll probably need a solid credit score.

How the Federal Reserve's decision to raise interest rates affects you

It's the third hike since the financial crisis, and five more are planned over the next two years.

The Federal Reserve just hiked interest rates – here's what it means

Ir you're looking at student loans, thinking about buying a house, or have a credit card, this is good to know.

The Tip Jar: Dining out? Here's when and how much you should tip

Tipping can be a minefield – let us help you satisfy social conventions.

The Tip Jar: 4 things millennials should be doing with their money

Just got a job and have no idea how to manage your money? These tips can set you up for the future.

Well done everyone, Minnesota's credit scores are the best

The state ranked No. 1 in Experian's rankings.

How does Walmart's new free shipping deal compare with Target and Amazon?

Walmart has upped its game in the shipping battle with Target and Amazon.

Here's why fewer Minnesotans are losing their homes to foreclosure

Good news for homeowners, not for potential buyers looking for a cut-price deal.