With a hand-mixer or a stand-mixer beat softened cream cheese with softened butter until it starts to whip up into a lighter mixture. About 3-5 minutes.
Slowly add powdered sugar, then vanilla. Continue to beat until smooth.
The cream cheese must be completely softened to prevent lumps. The frosting can be used right away or it can be refrigerated. If it's chilled, it will stiffen a bit. Bringing it more to room temperature will soften it.