FICO vs. VantageScore
FICO vs. VantageScore

FICO vs. VantageScore

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Similarities

FICO and VantageScore are two of the most widely used credit scoring models in the United States. Both are used to assess an individual’s creditworthiness and determine their likelihood of repaying a loan or credit card debt. One of the main similarities between FICO and Vantage Score is that both use a credit score range of 300 to 850. This range is used to indicate the level of risk associated with lending money to an individual. A higher score indicates a lower level of risk, while a lower score indicates a higher level of risk.

FICO Model

FICO is the most widely used credit scoring model in the United States, and it has been around for over 30 years. In 1956 the Fair Isaac Corporation (hence the name FICO) was developed. The FICO score is based on information from the individual’s credit report, including payment history, credit utilization, length of credit history, and types of credit. This is all explained in the blog post titled “5 Factors that Determine Your Credit Score.”  FICO scores are used by the majority of lenders, including banks, credit card companies, and mortgage lenders.  The FICO score ranges from 300 to 850, with higher scores indicating lower credit risk:

  • A score of 750 and above is considered excellent and may qualify for the best loan and credit card terms. This is where you need to strive to be.
  • A score of 700-749 is considered good and may result in favorable loan and credit card terms.
  • A score of 650-699 is considered fair and may result in average loan and credit card terms.
  • A score below 650 is considered poor and may result in high interest or declined loan/credit applications.

VantageScore Model

VantageScore, on the other hand, is a newer credit scoring model that was developed in 2006 by the three major credit bureaus: Equifax, Experian, and TransUnion. Like FICO, the VantageScore model is based on information from the individual’s credit report, but it uses a slightly different formula to calculate the score. VantageScore also places more weight on recent credit history, whereas FICO puts more emphasis on an individual’s overall credit history.  VantageScore 3.0 and 4.0 models range from 300 to 850, just like the FICO scoring model. Higher scores indicate lower credit risk:

  • A score of 800-850 is considered exceptional and may qualify for the best loan and credit card terms. This is where you want to get your credit score.
  • A score of 750-799 is considered very good and may result in favorable loan and credit card terms. This is also a very good place to be.
  • A score of 700-749 is considered good and may result in average loan and credit card terms.
  • A score of 600-699 is considered fair and may result in higher interest rates or declined loan/credit applications. This spot is not terrible, but it is not ideal when it comes to trying to be approved for the things you apply for.
  • A score below 600 is considered poor and may result in significantly high-interest rates or declined loan/credit applications. This is not a great spot to be, but there is always room for improvement.

Differences

One of the main differences between FICO and VantageScore is the way they handle certain types of credit. For example, FICO tends to give more weight to traditional forms of credit, such as mortgages and car loans, while VantageScore places more emphasis on newer forms of credit such as retail credit cards and alternative forms of credit like rental history and utility payments.  Another difference between FICO and VantageScore is that FICO scores are only available to the individual and the lender, while Vantage Scores can be obtained by the individual, lender, and credit bureau. This means that consumers may have a better chance of understanding and improving their Vantage Score, as they can access and review the score themselves.

In terms of accuracy, both FICO and VantageScore have been shown to be highly accurate in predicting credit risk. However, FICO scores have been around for a longer period of time and have been used by more lenders, which means that they are more widely accepted and trusted by lenders. 

Free Credit Scores

Here are 5 reputable websites where you can view your credit score for free:

Credit Karma 

Credit Sesame 

Bankrate

Credit.com

NerdWallet 

The following link will take you to the VantageScore website where there is a list of other companies that will provide free credit scores: https://vantagescore.com/consumers/tools/free-credit-scores/

Official FICO Scores

It is important to note that these websites may not provide your official FICO score, but they can give you a good estimate of what your score might be. To get your official FICO score, you can purchase it from myFICO.com:  https://www.myfico.com/products/fico-score-how-it-works Another website that allows you to gain access to your FICO score is Experian: https://www.experian.com/

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