FICO Vs VantageScore: 3 Differences to Look Into

The mention of credit score often reminds us of FICO— a scoring system designed by the Fair Isaac Corporation in 1989. Currently, FICO scores are a crucial part of most lending decisions, more so with regards to business loans, mortgages and credit cards.

But VantageScore—for the past decade— has been struggling to share FICO’s supremacy. VantageScore, a group effort of three top CRAs (credit reporting agencies) including Equifax, TransUnion and Experian utilizes the same scoring techniques as FICO, only with faintly different results.

Though they may not matter to you as the customer, here are the differences just in case you want to check different credit scores for different uses.

1.Scoring Models

Despite the numerous scoring models lenders use, VantageScore and FICO are possibly the only ones you’ll ever see.

On what basis do these two service providers rate you?

Payment history

Credit usage

Recent inquiries

Time-span of credit

Type of credit

Even though both Vantage and FICO look into the same information, each collects their data in unique ways.

FICO uses credit reports from hundreds of thousands of customers at a go. They collect their reports from the 3 top credit bureaus and evaluate them to come up with a perfect scoring model.

On the other hand, VantageScore calculates scores from a collective set of customer credit files obtained from the same three bureaus, to surface with a formula.

Both of them rate customers from 300 to 850. Earlier, VantageScore used 501 to 990 as their range, but later changed when VantageScore 3.0 was launched in 2013. Currently VantageScore uses the same numerical rankings as FICO which makes it more acceptable among lenders and consumers. Plus, it’s less puzzling for those who compare Vantage and FICO scores.

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2. Credit Inquiries

You’re aware that every time you apply for a new credit card, lenders conduct a “hard inquiry” to confirm your creditworthiness.

Both VantageScore and FICO punish customers who’ve had several hard inquiries within short span. What’s more, they both do “deduplication but with different time spans (45-day period for FICO whereas Vantage use a 14-day span).

While VantageScore looks at manifold hard inquiries for all forms of credit, FICO only considers auto loans, mortgages and student loans.

3. Late Payments

Don’t wait for a collection agency merchant account holder to collect your debts. Your record of late payments influences both your VantageScore and FICO score. Both of them look into these factors:

How long ago did you make the late payment?

How many of your bank accounts have recorded late payments

How many times have you missed making payments on your account?

Nevertheless, while FICO views all delayed payments in the same way, VantageScore treats them in a different way— most times it has heavier penalties for late home loan/mortgage than it does for other forms of credit.

Author Bio

Electronic payments expert, Blair Thomas, co-founded eMerchantBroker in 2010. His passions include writing/producing music, and travel. eMerchantBroker is America’s No.1 collection agency merchant account company, serving both traditional and high-risk merchants.