What's the difference between a VantageScore and a FICO score. Today, let's take a look
at two very popular types of credit scores. By the end of today's video, you'll know exactly
why they're different. Please take a quick moment to smash that like button, because
it really does help out the channel. Thanks. As far as I know, the VantageScore is a credit
scoring model used by the three credit bureaus, but let's not leave it to chance. Here's a
formal definition.
VantageScore is a consumer credit scoring model created through a joint venture of the
three major credit bureaus, Equifax, Experian, and TransUnion. The model is managed and maintained
by an independent company, VantageScore Solutions LLC, that was formed in 2006 and is jointly
owned by the three bureaus. VantageScore models compete with the credit scoring models produced
by Fair Isaac Corporation, FICO. Although this number has changed, the VantageScore
is a number from 300 to 850, with 300 being very poor credit and 850 being excellent credit.
What factors affect your VantageScore? This comes from the vantagescore.com website. The
biggest thing affecting your vantage score is total credit usage, balance, and available
credit, followed by credit mix and experience, payment history, age of credit history, and
new accounts.
Let's look at Wikipedia's definition of a FICO score. The FICO score was first introduced
in 1989 by FICO, then called Fair Isaac And Company. The FICO model is used by the vast
majority of banks and credit grantors and is based on consumer credit files of the three
national credit bureaus, Experian, Equifax, and TransUnion. Because the consumer's credit
file may contain different information at each of the bureaus, FICO scores can vary
depending on which bureau provides the information to FICO to generate the score. FICO scores
also range from 300 to 850, with 300 being very poor credit and 850 being excellent credit.
What factors affect your FICO score? This chart comes directly from the myfico.com website.
Check it out when you have a chance. But it's really nice to see these percentages, because
if you know what factors go into making up your score, it's really easy to know what
you have to do in order to change your credit score. Here's the breakdown. 35% of your score
comes from your payment history, 30% amounts owed, 15% comes from length of your credit
history, 10% from new credit, and 10% from your credit mix.
What's the difference between a VantageScore and a FICO score? Well, they're kind of like
two sides of the same coin. The VantageScore is the mathematical scoring bottle created
and jointly used by the three credit bureaus to show your credit worthiness, while the
FICO score is the credit scoring model created by the Fair Isaac Corporation to show how
credit worthy you are. Both scores are types of credit scores, but right now it feels like
the FICO score reigns Supreme. I think that's the one that most lenders are going to use.
It might not always be the case, but from what I've seen and what I've experienced,
it feels like the FICO score is more widely used.
A few quick things about VantageScores and FICO scores. It looks like both companies
have similar factors that affect your credit scores, but they probably weigh them differently.
That's why your VantageScore is going to be a little different from your FICO score. I'm
not fully clear on this, so if you know, you can let me know in the comment section, but
I think you have a VantageScore for Experian, a VantageScore for Equifax, and a VantageScore
for TransUnion. The only reason I say I don't know is because I haven't tried to pull a
VantageScore from Equifax or Experian, and my TransUnion VantageScore is provided to
me for free by my bank. Speaking of that, looking at my own TransUnion scores from both
companies, when my VantageScore was a 768, my TransUnion score was a 772 from FICO. So,
yeah. They're different, but they're in the same ballpark.
VantageScore and FICO scores are two different mathematical credit scoring models, but keep
in mind that they're sourced from the same information, your credit history from the
three credit bureaus. Whether you get a VantageScore or whether you get a FICO score, just know
what yours is. I appreciate you watching today, and I hope you enjoyed it. If you did enjoy
it, please don't forget to headbutt that like button, share, comment, and subscribe, and
join me on this journey to grow Mind Over Finance to 1,000 subscribers strong. Thanks,
guys. See you next time.