What You Should Know About FICO and Vantage Credit Scores

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By:Mike Cibik

What You Should Know About FICO and Vantage Credit Scores

When it comes to credit scores, most borrowers think of FICO scores. But, recently another credit scoring system-VantageScore- is gaining popularity. While both FICO credit score and VantageScore are calculated basis the same five parameters- payment history, credit mix, current debts, length of credit history, and new credit- there are subtle differences between them.

Before we talk about the differences, let us explain the five scoring parameters in detail.

1. Payment history

Payment history means whether a borrower pays his creditors on time or not. For calculating FICO scores, generally, 35% of the score is allocated to the payment history of a borrower. Points are reduced for late repayments. With VantageScore, certain kinds of late payments such as mortgage, carry a more severe penalty than others.

2. Credit mix

Credit mix refers to the variety of credit accounts an individual owes. FICO allocates 10% to credit mix. Both FICO and Vantage credit score favorably view having a good mix of retail debt, credit card debt, installment loans such as auto loans, and mortgages which can help borrowers if they find themselves going through a tough time – see more about installment loans during tough times.

3. Current Debts

This refers to the amount of money a borrower owes now. FICO allocates 30% of its score to a person’s current debts. A big outstanding debt doesn’t necessarily mean a lower credit score. For FICO and VantageScore, a ratio of money owed to the amount of credit available is what matters.

For instance, person A owes $10,000 presently, but all his lines of credit are extended, and credit cards are maxed out and person B owes $50,000, but he’s not close to the limit on any of his credit accounts. Person A will have a lower credit score than Person B. VantageScore also rewards people for maintaining a healthy credit utilization record. For Example, keeping your credit card balances under 30% will get you a higher score.

4. Length of credit history

Length of credit history means how long has a person owed. For FICO, the longer a person’s credit history, more is his creditworthiness and his FICO score. FICO calculates 15% of its score based on a borrower’s credit history. VantageScore allows shorter credit histories and is more useful for new borrowers.

5. New credit

New credit means recently-opened credit accounts. This includes getting credit cards with no credit history. FICO computes 10% of its score based on how many new credit accounts a borrower has opened. Typically, a person who has taken up many loans in a short period prior to applying for the loan in question will be considered a credit risk, and his score will be reduced by a few points. VantageScore also penalizes your credit score for making multiple hard inquiries in a short period of time, for availing debt.

FICO vs. VantageScore

FICO and VantageScore have similar credit scoring models (described above) and solicit credit information from the same three major credit bureaus- Equifax, TransUnion, and Experian. But there are significant differences in their computation method and rating priorities.

Different methods of gathering consumer credit data

FICO gathers credit reports from the three bureaus for millions of consumers at once, and then, analyzes them to arrive at a final score. VantageScore uses a combined set of consumer credit files for a borrower from credit bureaus.

Different scoring requirements

FICO requires at least six months of credit history and at least one account reported to the CRA in this period. VantageScore is great for new borrowers as it asks for only one month of prior credit history and one reported account within the last two years.

Different treatment of late payments

FICO penalizes all types of late payments equally. But VantageScore penalizes more points for late mortgage payments.

Different impact of new credit inquiries

FICO considers all credit inquiries made within 45 days as new inquiries (after deduplication) and penalizes borrowers for making too many of them. VantageScore limits itself to a span of only 14 days prior to application for credit scoring.

Different influence of low-balance collections

Both FICO and VantageScore penalizes borrowers for accounts sent for collection. But FICO ignores collection accounts that are already paid off or that had an original amount of less than $100. VantageScore views all collection accounts equally.

As a borrower, it makes sense to understand these differences well and more importantly, their implication on your creditworthiness so that you can make wise borrowing decisions and avoid bankruptcy.

For 35 years, the Philadelphia, Pennsylvania debt-relief law firm of Cibik & Cataldo P.C. has provided superior legal services to thousands of individuals in the surrounding areas. Call us at 215-735-1060 to get your questions about credit score or bankruptcy answered by our team of experts.


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