What do you need to know about the Vantage score vs FICO? While you may be more familiar with FICO, the Vantage score is newer to some people, so its overall significance may not strike you immediately. There may be a few things these scores have in common just as there are a few differences. In either case, knowing what each of these scores mean and how they are calculated will help you when you want to improve your credit score or just see where you fall on the scale.
The FICO Score
Many people are more familiar with the FICO score because it has been around since the 1980s. Its original intent was to help lenders determine which borrowers were most likely to default. This score is based on five different categories. Each category has a different degree of importance as each one makes up a different percentage of the score:
• Payment History — 35%
• Level of Debt — 30%
• Length of Credit History — 15%
• Types of Credit — 10%
• Credit Inquiries — 10%
As the country’s leading credit scorer, more companies still rely on this score than the Vantage Score. There is a good reason why FICO remains the most used credit scoring company in the industry. In order to use FICO, lenders and other credit related companies all pay Fair Isaac, the original creator of the credit score system, for use of its scoring algorithm through a licensing deal. This means that lenders have very little choice when it comes to getting a good reading on credit scores.
The FICO credit score ranges from 300 to 850. The one disadvantage of using the FICO score is that it does not have an official range for each of its scores. However, there can be some estimates on how you fall into the range according to score and determine if you have good, fair or poor credit:
• 300 — 580: This is the approximate range for very bad credit, meaning you are ineligible for all unsecured credit cards as well as loans and other major purchases.
• 581 — 639: This is the approximate range for bad credit but not as bad as the lower range. When you are in this range, you may get to use some unsecured credit cards but mostly secured cards. In either case, you have a better chance at rebuilding your credit score at this range.
• 640 — 699: This is the approximate range for fair credit, meaning it is not poor but also not as good as it could be. You may not get approval for most major credit cards and you may have trouble with loans such as home and vehicle loans unless you have a cosigner.
• 700 — 729: This is the approximate for good credit, meaning you can get some of the major credit cards but not those in the premier ranges. You may also have an easier time with loans even without a cosigner.
• 730 — 769: This is the approximate range for very good credit, which means you not only have access to premier credit cards but also many of the rewards and cash back offers afforded these cards. You also have a better chance at loans for homes, vehicles and other major purchases.
• 770 — 850: This is the approximate range for excellent credit meaning nothing is closed to you. You can get any kind of credit card you want and you do not need cosigners or any other outside collateral other than your own assets when you want to take out a loan.
The Vantage Score
The Vantage Score has only been around since 2006. This credit scorer was created by the three major credit reporting agencies Equifax, Experian and TransUnion. Its primary purpose was to create a consistent system of credit reporting among these three companies. The creation of this new system has been met with some contention with Fair Isaac, but it has been used for the same purpose as the FICO score: it is meant to tell lenders which borrowers present the most risk. However, it operates on different scales and categories than FICO.
For instance, where FICO uses five categories in its credit scoring formula to determine a rating, Vantage Score uses six. These include:
• 32% – Payment History
• 23% – Utilization
• 15% – Balances
• 13% – Depth of History
• 10% – Recent Credit
• 7% – Available Credit
While both scores place a high percentage on your payment history, Vantage Score places more of an emphasis on how much credit you are using. However, FICO places more emphasis on the credit history and the types of credit you use than Vantage Score.
Perhaps the most notable difference between these scores is the range. Vantage Score uses a range from 501 to 990, which is actually has a scale easier to understand than FICO. Also, letter scores are assigned to these ranges:
• 501 — 600: This score equals an F, meaning you are labeled a high risk. You are unlikely to get anything other than secured credit cards in this range.
• 601 — 700: This score equals a D, meaning you are labeled as non-prime. You may be able to get a few unsecured credit cards but still unlikely to find loans or other major purchases.
• 701 — 800: This score equals a C, meaning you are labeled as prime. You have more of a chance with some major credit cards and can probably get loans and other major purchases if you have a cosigner.
• 801 — 900: This score equals a B, meaning you are labeled as prime plus. At this level, you have options for major credit cards as well as the premier rewards that come with these cards. You also have a good chance at getting loans and making major purchases without a cosigner.
• 901 — 990: This score equals an A, meaning you are labeled as super prime. You not only have access to major credit cards and the rewards they give, but you also do not need a cosigner for major purchases or loans.