TUESDAY TIP # 57 – FICO vs. VantageScore: Whats the Difference? Your credit score is in many cases the most influential factor in a lenders decision to grant you credit and at what rate. The higher the score, the less youll pay for the use of someone elses money. Although the most widely used credit model is the FICO (named for the scores developer, Fair Isaac Corporation), theres another score for sale--the VantageScore. Its very important to know which one youre looking at. The more traditional FICO score can range from 350 to 850. The VantageScore, however, ranges from 501 to 990 and parallels a grading system of A to F. And these different scales can cause confusion. Understand the basics before you purchase your credit score: • A FICO score of 750 is considered a good credit score, which means lenders likely will view you as a good credit risk. A VantageScore of 720, however, would yield a grade of C (901 to 990 = A, 801 to 900 = B, and so on). • VantageScore was launched in March 2006 and jointly developed by the three major credit reporting companies (Equifax, Experian, and TransUnion). These credit reporting companies market the VantageScore from their respective Web sites. For example, consumers can purchase a VantageScore for $7.95 at vantagescore.experian. Equifax, on the other hand, only sells VantageScores to businesses. Check each credit reporting companys Web site for details. • You can buy your FICO score from Equifax or TransUnion through myFICO, or from the credit reporting companies Web sites. • If you buy your FICO score from more than one credit bureau, you might be surprised to see a different number on each one. This occurs because the data in your files at the credit bureaus may vary. • In addition to selling the FICO score, credit reporting agencies, other credit score developers, and lenders may promote their own proprietary scores. These and other non-FICO scores tend to vary even more widely from source to source because, in addition to there being differences in the underlying data, each provider also uses a different scoring formula and scale. • Given how entrenched FICO scores are in the credit industry, a large-scale move to VantageScore or any other scoring system probably wont happen quickly. While its too soon to know if VantageScore will one day give FICO competition, its never too early to understand how youre being evaluated and how you rate. For questions about credit scores or other credit-related issues, stop by or contact us at 781-843-5626. Want more information or information on a specific topic? Let us know! We are here to help YOU!
Posted on: Tue, 13 May 2014 21:15:00 +0000
Trending Topics
Recently Viewed Topics
© 2015