In the U. S. two companies dominate the credit scoring industry: FICO® and VantageScore®. What is a VantageScore? What is a FICO score? Both businesses create credit scores that creditors and lenders can use to assess applicants and oversee client accounts. However, there are differences between Vantage and FICO scores.
Lenders may utilize a variety of versions of credit scoring models, both older and newer, in addition to potential differences in the scoring models from these two companies. These consist of “industry specific” models (like those used for credit cards or auto loans, for instance) and “base” credit score models. Industry-specific models and version employ different weighting characteristics to produce scores different than a general “base” model would.
Yo, credit fam! Ever wondered if your VantageScore is higher than your FICO score? You’re not alone. This is a common question, especially since both scores are used by lenders to assess your creditworthiness.
Let’s break it down, yo. The credit scoring models VantageScore and FICO have ranges from 300 to 850. Having a higher score indicates that you are a low-risk borrower, which facilitates loan approval and lower interest rates.
But here’s the catch: VantageScore and FICO use different algorithms and weigh factors differently. This means your score can vary between the two models.
Generally, VantageScore tends to be slightly higher than FICO. VantageScore is more tolerant of some negative factors, like late payments and inquiries, which explains why. However, this isn’t always the case. Your individual credit history will determine which score is higher for you.
Here’s a quick breakdown of the differences:
VantageScore:
- More forgiving of late payments and inquiries.
- May be higher than FICO for consumers with limited credit history.
- Used by some lenders, but not as widely as FICO.
FICO:
- More widely used by lenders.
- May be lower than VantageScore for consumers with limited credit history.
- Less forgiving of late payments and inquiries.
So, which score is more important?
The answer is both FICO is still the dominant credit score used by lenders, but VantageScore is gaining popularity. It’s a good idea to track both scores to get a complete picture of your creditworthiness
Here are some tips for improving your credit score, regardless of the model:
- Pay your bills on time. This is the most important factor in your credit score.
- Keep your credit utilization low. This means using less than 30% of your available credit.
- Check your credit reports for errors and dispute any inaccuracies.
- Limit the number of new credit accounts you open.
- Become an authorized user on a credit card with good credit history.
Remember, building good credit takes time and effort. But by following these tips, you can improve your score and qualify for better loan rates and terms.
Peace out, credit fam!
P.S. If you’re looking for a free credit score, you can get one from Credit Karma or Experian.
How FICO and VantageScore weigh different credit score factors
Events on your credit history impact the two scores differently because they place different weight on each factor.
Here is how FICO weighs the factors that comprise its score:
- Payment history: 35%
- Credit utilization: 30%
- Length of credit history: 15%
- Mix of credit: 10%
- New accounts opened: 10%
And here is the VantageScore 4.0 calculation:
- Payment history: 40%
- Age and type of credit: 20%
- Credit utilization: 20%
- Balances: 11%
- Recent credit: 5%
- Available credit: 2%
Therefore, you might do better with a VantageScore-using creditor than a FICO score-using creditor if high utilization is the largest mark against your credit. And if you have little credit history, you might not even have a FICO score. But youll probably have a VantageScore if you have any scorable activity in the last 24 months.
Your utilization rate can be a significant criterion for scoring since it shows how well you’re managing your debt and whether you’re spending more than you make. Maintaining credit card balances above 200% of your credit limits and maxing out credit is an unsustainable pattern that can result in bankruptcy. High utilization is a big red flag, which is why it carries the importance that it does.
FICO Score and most older VantageScore models measure the amount of credit used divided by the amount available. Thus, if your total credit limit is $10,000 for all of your revolving accounts and your total balance is $9,000 for your balances, your utilization is 90%. Thats considered very high.
VantageScore 4. 0 looks back and considers your utilization trend in its scoring. For example, whether you usually pay your credit card bill in full each month or just the minimum amount due each month can have an impact on your credit score.
A variant of FICO’s most recent model update, FICO 10, known as FICO 10T, also uses “trended” data to generate a credit score. Starting in October 2022, both VantageScore 4. 0 and FICO 10T may be utilized in the conforming mortgage loan underwriting process for loans that are sold to Freddie Mac or Fannie Mae. The Federal Housing Finance Agency anticipates that the implementation of FICO 10T and VantageScore 4 will be necessary because permitting these changes will require updates to underwriting software throughout the whole mortgage origination spectrum. 0 will be a multiyear effort.
The FICO 10 model also treats the use of personal loans differently than in the past. These unsecured installment loans are frequently used to pay off credit card debt, which can raise your credit score by consolidating debt. But, your credit score might suffer if you start to accrue new debt on those recently closed credit card accounts. As such, its a good idea to avoid using your credit opportunities in this way.
Depending on whether they are medical or have been paid off, collection accounts are handled differently, even though unpaid collections can affect both the FICO and VantageScore credit scores.
The most recent models of FICO, which began with FICO Score 9 and are now included in FICO 10, do not use paid collection accounts against you. It also gives less weight to unpaid medical collections than other unpaid collections. FICO Score 8 doesnt distinguish between medical and non-medical collections and does include paid collection accounts. Both versions ignore collection accounts when the original unpaid balance was less than $100.
VantageScore 3. 0 and 4. 0 disregard medical collections and give paid collection accounts less weight, but they both include outstanding collections regardless of amount. Even tiny collections count against you.
Creditors obtain your credit report when you apply for a new account, which may temporarily lower your credit scores. On the other hand, scoring models let you shop quickly with several providers and only have one credit pull against you.
VantageScore ignores extra pulls that occur within a 14-day window. During that time, if you apply for multiple loans—even different types of loans—only one pull will be against you.
Older FICO models, which include those still in use for mortgage lending, only give you 14 days to shop for a mortgage. In contrast, more recent models offer a 45-day window. And unless they are for applications for a mortgage, auto loan, or student loan, multiple inquiries are counted against you by FICO scores.
VantageScore vs. FICO credit scores
The goal of both VantageScore and FICO scores is to objectively forecast the likelihood that a customer will default on their debt. However, the models weigh the factors that make up the score differently. Here are some of the main differences between VantageScore and FICO scores:
VantageScore vs FICO – Credit Score Ranges (EXPLAINED)
FAQ
Do lenders look at FICO or Vantage?
Are Vantage scores usually higher than FICO scores?
Do car dealers use FICO or Vantage?
How do I convert VantageScore to FICO score?
What is the difference between VantageScore and FICO?
FICO Scores range from 300 to 850. At first, VantageScore credit scores featured a different numerical scale (501 to 990). However, VantageScore 3.0 and 4.0 adopted the same 300 to 850 scale that FICO uses. With both FICO and VantageScore models, higher scores are better.
What is a good VantageScore credit score?
The latest VantageScore credit scores range from 300 to 850, and a good score may be considered a VantageScore of 661 or higher. But lenders can also set their own criteria for what they consider to be a good VantageScore credit score. Blueprint is an independent publisher and comparison service, not an investment advisor.
Where can I get a free copy of my VantageScore & FICO score?
You can get free copies of your VantageScore and FICO Score from credit card issuers, banks, credit unions, lenders and third-party providers. Your scores depend on which scoring model the platform gives you and which one of your credit reports the scoring model analyzes.
Does VantageScore offer industry-specific credit scores?
Also know that, unlike FICO, VantageScore does not facilitate industry-specific credit scores. For example, FICO offers auto industry credit scores such as the FICO® Auto Score 9 for lenders issuing auto loans ,. There is no VantageScore equivalent. Do you have a good credit score or a not-so-great score?