Credit Score Model: Difference between Vantage Score and FICO Score
VantageScore and FICO are helpful in creating credit score modelling. The software analyzes the credit reports, which in turn helps generate the credit score. FICO and VantageScore ultimately have the same motive or goal which is to predict chances of an outcome. It is highly likely that you might feel elated, event after you value got yourself checked by either of the credit scoring model.
Two companies are the moghuls of the credit scoring realm. FICO is definitely the industry leader, but what stands true is the fact that VantageScore is slowly emerging as a major market share holder. Both the companies develop a decent credit score which helps lenders as well as creditors evaluate the applicant and also manage the customer’s accounts. However, the scoring models are slightly different in criterias. Let’s understand the difference between the two scoring models:
VantageScore Vs FICO Credit Scores
- Tri-Bureau vs. Bureau-Specific Models – VantageScore is the one to create and form single tri-bureau model that is used to create credit-report from TransUnion, Equifax, and Experian. FICO offers scoring model which helps create bureau-specific models. So, in reality the latest FICO-score 9 has three different FICO Score.
- Minimum Scoring Requirement – Credit account or a tradeline which is at least 6 months old and some form of activity in the past 6 months. This is basic requirement of FICO to form a credit score based upon the credit reports. VantageScore works well and is scoreable when the credit report if not 6 months old, has a credit report at least one account in it.
- Score Ranges – High score essentially indicates towards a less likely chance of missing payment. FICO has scores from 300 to 850, the industry-specific score spans somewhere about 250 to 900. Vantage Score ranges from 501 to 990, the latest one 3.0-4.0 is equivalent to 300-850 range.
Importance of Credit Scoring Factors:
The credit profile and the scoring model of choice decides the impact and intensity of the action on the credit score.
- Payment History – On-time, late, payments, accounts in collection as well as defaults, debts, or bankruptcy.
- Credit Usage – The amount available on the credit card, the utilization rate.
- Installment – In fairly low percentage, the amount that you owe on the installment loans.
- Credit History – The length and the experience you hold with managing credit accounts.
- Recent Activity – Hard inquiries which may be due to the recent application for a new account.
The basic structure of the important features remain more or less the same. The difference is in the weightage of each credit scoring model. It all comes down to credit utilization, collection accounts, and hard inquiries.
However different the two scoring models are, the basic working principle remains the same. It is all about making correct prediction using the data at hand. This essentially means that good credit history equals to an improvement in all the scores. Fico and VantageScore are best used, when you are focused towards paying billing