Sign In/Sign UpTRENDING BASIC MONEY MANAGEMENT TIPS
TRENDING BASIC MONEY MANAGEMENT TIPS
08.13.2021 / Lifestyles « Back to all articles
What’s the Difference Between a FICO Score and VantageScore Credit Score?
Lenders use credit scores to determine the creditworthiness of a borrower. Common types of activity that contribute to your credit score are debts, such as student loans and mortgages, credit cards, and auto loans.
Credit scores range from 300, which is very poor, to an excellent 850. If you make any financial mistakes, your score can drop. Lower scores are a higher risk to lenders. When your score falls below a good number, you may have trouble securing a loan, or you may end up paying higher interest rates.
Lenders check your score nearly every time you apply for credit, so you need to know the factors that affect your score and what your numbers are. There are two main competing companies that compute credit scores and sell them to lenders to determine borrowing power and worthiness.
FICO Score
The FICO score has been around the longest. This is a California-based company used by approximately 90% of all lenders that check a customer's credit score. The Fair Isaac Corporation established the FICO model. There are many different versions, but the FICO8 is the most often used.
You must have at least six months’ worth of financial activity to obtain a FICO credit score. Your score depends on your payment history, amount of debt owed, the total length of your credit history, any new credit accounts you have, as well as the variety of accounts you hold.
Both FICO and the competing company VantageScore comply with the Equal Credit Opportunity Act and use a similar scoring model, with the most importance placed on payment history. However, there are some differences.
VantageScore
The three main credit bureaus founded this Connecticut company in 2006 as an alternative to the FICO credit model. It is easier to get a VantageScore since this company will assign a credit score after only a month. This is an advantage for borrowers who need to access a loan or credit fast and don't have time to build up an extensive credit history.
The VantageScore uses payment history, depth of the borrower's credit, utilization, balance amount held with each creditor, new credit, and available credit amount to calculate their scores. As you can see, both models are similar and give you a good idea of the areas of your finances to pay close attention to.
Good financial habits help you build a strong credit score. Even if you have experienced problems in the past, you can work towards raising your score by paying down any debts and making your payments on time each month. A healthy credit score gives you greater freedom to make big life decisions like buying a house, a car, or even securing the job that you want.
Mortgage 101: What You Should Know
08.13.2021 / Lifestyles « Back to all articles
What’s the Difference Between a FICO Score and VantageScore Credit Score?
Lenders use credit scores to determine the creditworthiness of a borrower. Common types of activity that contribute to your credit score are debts, such as student loans and mortgages, credit cards, and auto loans.
Credit scores range from 300, which is very poor, to an excellent 850. If you make any financial mistakes, your score can drop. Lower scores are a higher risk to lenders. When your score falls below a good number, you may have trouble securing a loan, or you may end up paying higher interest rates.
Lenders check your score nearly every time you apply for credit, so you need to know the factors that affect your score and what your numbers are. There are two main competing companies that compute credit scores and sell them to lenders to determine borrowing power and worthiness.
FICO Score
The FICO score has been around the longest. This is a California-based company used by approximately 90% of all lenders that check a customer's credit score. The Fair Isaac Corporation established the FICO model. There are many different versions, but the FICO8 is the most often used.
You must have at least six months’ worth of financial activity to obtain a FICO credit score. Your score depends on your payment history, amount of debt owed, the total length of your credit history, any new credit accounts you have, as well as the variety of accounts you hold.
Both FICO and the competing company VantageScore comply with the Equal Credit Opportunity Act and use a similar scoring model, with the most importance placed on payment history. However, there are some differences.
VantageScore
The three main credit bureaus founded this Connecticut company in 2006 as an alternative to the FICO credit model. It is easier to get a VantageScore since this company will assign a credit score after only a month. This is an advantage for borrowers who need to access a loan or credit fast and don't have time to build up an extensive credit history.
The VantageScore uses payment history, depth of the borrower's credit, utilization, balance amount held with each creditor, new credit, and available credit amount to calculate their scores. As you can see, both models are similar and give you a good idea of the areas of your finances to pay close attention to.
Good financial habits help you build a strong credit score. Even if you have experienced problems in the past, you can work towards raising your score by paying down any debts and making your payments on time each month. A healthy credit score gives you greater freedom to make big life decisions like buying a house, a car, or even securing the job that you want.
