In the world of credit reporting there are two major scoring models, the FICO and Vantage scoring models. FICO has been around since 1989, and while Vantage Score has only been available since 2006, it has become a major player in the credit industry. FICO was developed by the Fair Isaac Corporation and the Vantage score was created by the three credit reporting bureaus, Experian, Trans Union, and Equifax.
While both models, for the most part, take into consideration the same elements of a credit report those elements are weighted differently. Vantage Scores are “base” scores where FICO has not only base scores but industry specific scores as well. FICO’s base scores are FICO 08 and 09. These are normally the scores consumers see when they pull their own credit reports. Industry specific scores would be scores for mortgages, auto, some credit cards, insurance, etc. A person can have as many as 65+ FICO scores depending on what industry is pulling the credit. All those different score factors are weighted differently per industry. In the same realm FICO base scores are also weighted differently than Vantage base scores. For example, a person with a 660 mortgage FICO score could have a base score of 680-700 but it’s important to note that base scores are not used by any industry.
There are several big differences between a Vantage Score and a FICO score:
- Length of Credit History: To generate a FICO score a consumer must have at least one account that has been open for at least 6 months and it must have reported during those 6 months. Vantage Score will generate scores with one account that has only one month of history on it.
- Inquiries: Newer FICO models count all inquiries pulled within a 45-day period for specific industries (auto, mortgage) as one single inquiry. Again, this on FICO’s newer scoring models such as FICO 10 and 10T. On FICO’s older mortgage scoring models, the inquiry timeline is 45 days for Equifax and Trans Union and 14 days for Experian. Vantage score only has a 14-day window so inquiries can have a much greater effect on a Vantage score than they do on a FICO score.
- Collection accounts: FICO has now eliminated all paid and unpaid medical collections under $500 from the scoring model algorithm. Vantage Score does not factor in any paid collection (medical or otherwise), nor does it factor in any unpaid medical collection regardless of the balance.
How can a consumer get their Vantage or FICO scores? For a personal (base) FICO score there are several different avenues a person can take. Some credit cards and banks offer these scores to a consumer, or a person could go to www.annualcreditreport.com or directly to Experian, Trans Union, and Equifax. Vantage scores can be obtained through several personal finance websites such as Credit Karma. Those offer the Vantage 03 score from Trans Union and Equifax, however, they do not provide an Experian score.
Whatever avenue a consumer takes to obtain their credit scores they need to be sure that are getting a true FICO or Vantage score. A lot of sites that offer free credit scores are providing “educational scores” These scores are based on less information than industry specific or even base scores require. They are generated by “soft” credit pulls that do not affect a credit score. These scores are used primarily by credit cards offering you a preapproved card, some banks, and some personal finance sites. The thing to remember about educational scores is that they can run up to 30 days behind. They are not a snapshot in the moment as are true FICO and Vantage scores. Chances are an educational score is going to be quite a bit higher than a true FICO score (either industry specific or base score) or Vantage Score.
Both FICO and Vantage have new scoring models recently released: FICO 10 and 10T and Vantage 04. While not widely used yet, they both look at trended data. In other words, they also look at credit performance history over the last 24 months, which could alter scores from the models currently used.
No matter what scores a consumer is looking at the actions needed to get to a better credit score remain the same for any scoring model and for any industry:
- Keep your revolving balances low
- Pay your bills on time
- Don’t open new accounts (unless you absolutely have to)
- Don’t close old accounts.
Follow those four points and any score should move in a positive direction.