The Fico score and VantageScore are two different scoring models utilized by lenders to determine both risk and creditworthiness. Both companies have developed systems that calculate credit scores that represent the risk of default on a loan or any other type of credit loan.
Both the traditional FICO score and VantageScore (3.0) use the same scoring range of 300-850. The difference is that they evaluate the information in your credit report slightly differently. Let's now get into how these two scoring models differ.
Fico and VantageScore credit-scoring models both use your credit report data to generate a credit score for you. The key thing here is that depending on which model is used, the data collected will affect your score differently. Here are the key factors used by each.
This scoring model has six main categories that it groups your credit information into. Each representing the following percentages of your score.
This scoring model groups your credit data into five categories. Here is how the percentages break out.
Now, keep in mind that the impact each person will receive from each category will vary by individual credit history and the credit-scoring model used.
In order for a FICO score to be generated for you, you do need to have some sort of credit history built up. You need to have at least one account that has been reported to the credit bureaus within the previous six months and a minimum of one account open for a minimum of six months. Without this, a score will not be generated for you.
With the VantageScore model, one account that has to be reported within the previous 24 months and you only need one month worth of credit history. So if you don't have any credit history established or you use credit infrequently, you will still receive a score.
Credit bureaus have always received information that is public record such as tax liens and civil judgements. In July 2017, changes were made and this information was not being included on consumers’ credit reports. With that being said, the latest VantageScore version does still use tax lien info although it is not weighed as heavily. For the FICO scoring models, you can still expect a significant impact.
When you apply for new lines of credit (credit cards, mortgage, student loans) you can negatively affect your credit score. Since people may be trying to get the best deals, the credit bureaus have minimized the impact these inquiries will have on your score.
The FICO credit-scoring models base your score on what your credit utilization and borrowing looks like at that given time.
VantageScore 4.0, on the other hand, looks at what your pattern of behavior is over a longer period of time. They can go back up to two years’ of credit utilization and consumer spending data to work into your score.
They key takeaway here is to pay attention to the scoring model groups your credit information falls into for each one along with their respective percentages as we outlined above.
FICO has two types of scores. One is a base score and the other is an industry-specific score. The base score is related to one's ability to repay debt based on their credit profile and the scoring range is 300 to 850.
The industry-specific score looks at the specific type of debt (i.e. mortgage, auto loan) and helps predict your ability to repay it. This score ranges from from 250 to 900.
On the flip side, the VantageScore model only generates base scores and stays away from industry-specific scores. This model has gone through some changes over the years with their ranges but currently the range stands at 300-850.
There are many ways you can get your credit score. You can head to one of the popular sites like CreditKarma, lenders, credit counselors and the credit bureaus directly. Keep in mind that not all lenders report to the three main agencies at any given time so your score will vary slightly between agencies.
You also want to be aware of what kind of score you are receiving. An education score for example can be similar to the Fico and VantageScore credit scores but is not typically the score lenders will be looking at.
There are a number of different credit scores floating around with your name on them but your Fico and/or Vantagescore are the two most important ones that lenders are looking at. For this reason, it is key for you to know which scoring model is being used so you know how your data is being analyzed. This way, you have a full understanding of the risk factors that are currently affecting your score and if need be, you can begin the process of trying to boost your credit score.
If you access your credit report and you find incorrect information, you may want to look into hiring a reputable credit repair company. They can help you go through all the proper steps to rectifying your credit report so it returns to good standing. The key thing to remember is how important your score is to your financial well being and the information on your credit report is what is being used to calculate your score.