How does vantage score compared to fico

All of the factors which cause your credit score to move up or down are found on your credit reports. Information outside of your credit reports has no direct impact on your scores.

Before a lender can use a credit score to evaluate applicants, the scoring model must pass a few tests. Those terms mean that credit scores in the U. And they have to work aka demonstrably and statistically sound. A credit score is supposed to predict the likelihood that someone will pay a bill 90 or more days late in the upcoming 24 months.

You can think of them like the Pepsi and Coca Cola of the financial world. Below are a few key differences between the two credit score brands. Each one creates and sells credit scores to lenders and other businesses in the financial industry. FICO is a publicly traded company based in California.

The analytics company was founded in by an engineer, Bill Fair, and a mathematician, Earl Isaac. Not everyone is eligible for a credit score.

And at least one tradeline on your report must show some activity in the last six months. Qualifying for a VantageScore is a little easier. Your credit report simply needs at least one tradeline present, regardless of the age of that account.

A service like Experian Boost may help ensure you have every opportunity to build a credit profile. A credit scoring model looks over your credit report and awards you a certain number of points based on the information it finds.

You can earn points for each factor the scoring model considers e. For example, a credit report with zero late payments would be worth X number of points to be added to your overall score.

FICO and VantageScore models assign different values or weights to the items they find on your credit report. But that same report with no late payments might net you points under a VantageScore scoring model. These point values are purely hypothetical, but they do reflect the way credit scores work.

Higher scores indicate less risk. But the way lenders interpret the two types of scores may not be identical. The definition of a good credit score can vary from lender to lender. It may also differ based on the credit score brand.

But you might need a VantageScore credit score for a different credit card issuer to approve your application. You have many. Between the many different FICO and VantageScore versions, there are actually hundreds of different credit scores that lenders may use to evaluate you—thousands if you count custom-made models. If you apply for a loan, credit card or some other type of financing, the lender will probably check your FICO Score when it reviews your application. Nine out of the 10 biggest banks in the U.

S use VantageScore credit scores for some purpose. Plus, lenders and consumers used some Consumer credit behavior has changed over the years. Take note though that according to the Consumer Financial Protection Bureau, mortgage loan inquiries within a day window are recorded as a single hard inquiry.

An inquiry is a request for your credit file. There are two types : hard and soft. Hard inquiries occur when lenders look at your file after you apply for credit. In general, these will affect your credit scores. Examples of soft inquiries include requesting your own credit reports or lenders looking at them to qualify you for a prescreening offer. Both credit-scoring models have evolved over the years, resulting in multiple versions of each.

FICO generates two types of scores — base and industry-specific scores. It only calculates base scores. When it was first introduced in , the scoring model had a range of to You can get your credit scores from a variety of sources, including lenders, credit bureaus, nonprofit credit counselors and personal finance websites like Credit Karma.

A new credit scoring system, called VantageScore, is being promoted by the three major credit reporting bureaus. It was developed by them as an alternative to the dominant FICO credit scoring system that lenders have traditionally relied on.

For consumers, the biggest difference between the two is how they report your credit score. The FICO system reports scores on a range from , with higher scores signaling better credit. The VantageScore system operates in a similar manner, but uses a range from So while a score of represents excellent credit under FICO, it's a fairly middling score under the VantageScore system.

So why did the three credit reporting companies, Experian, Equifax and Transunion, develop the new system in the first place? They say one reason is for consistency - FICO scores frequently vary when reported by the three different bureaus. They also say the new system is easier to understand; every hundred point range in the VantageScore system corresponds to a letter grade - A, B, C, D or F - that gives the consumer an instinctive feel for where their credit stands.

However, skeptics note that the main reason FICO scores vary among the three credit bureaus is because lenders don't always report the same information on a borrower to all three - some lenders and creditors may only report borrower performance to one of them, for example. The new system doesn't fix that. Since they developed the VantageScore system, they don't have to pay another company for using it - provided they can get lenders to embrace it instead of FICO as the primary system for evaluating consumer credit worthiness.

That doesn't seem likely to happen, at least in the immediate future. At the same time, you may still encounter the VantageScore system from time to time, so it helps to understand how it works.