Credit scores are the numerical representation of a person's creditworthiness derived from their credit history. Lenders and credit issuers use this score to determine the likelihood of them paying back the money borrowed.
There are two types of credit scores used in the United States: Vantage and FICO scores. VantageScore is a newer credit-scoring model developed by the three major credit reporting agencies. It was launched in 2006, while FICO Score has been around since 1989 and created by the Fair Isaac Corporation.
Here are some differences between VantageScore and FICO scores:
Range of Scores
The VantageScore ranges from 300-850, while FICO Score ranges from 300-850 as well, depending on the type of score requested.
Credit History
VantageScore can factor in a shorter credit history than FICO score. VantageScore also weighs on-time rent payments. While FICO scores put more emphasis on long credit history, recent credit inquiries, and delinquencies.
Credit Scoring Model
VantageScore uses a "trended data" model, which takes into account credit usage as specific events over a period of time. They also use a scoring algorithm that can improve credit evaluations for people who have inconsistent credit behavior.
FICO score uses a traditional credit-scoring model that weights five categories of credit information, including payment history, credit utilization, length of credit history, new credit accounts, and types of credit used.
Creditor Adoption
FICO score is most widely used by the majority of creditors, while Vantage score is quickly gaining adoption among lenders, but not as widely adopted as FICO.
When it comes to which score matters more, the answer varies. The score that matters most depends on what credit issuers or lenders are looking for. Some creditors or lenders may use both VantageScore and FICO Score to determine a borrower's creditworthiness.
In conclusion, both VantageScore and FICO Score can give an insight into one's credit history. It is important to take relevant steps to improve the credit score by making timely payments, keeping credit utilization low, and avoiding opening too many new accounts at the same time.
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