Credit Score Monitoring: FICO vs. Vantage Score
June 14th, 2019
June 14th, 2019
In a recent blog post, we explored some of the reasons why a lender may pull up a credit score for you when you apply for a mortgage which does not match the score you have pulled up for yourself. Please see “When You Apply for a Loan, Why Does Your Credit Score Not Match the One You’ve Monitored?”
One of the most common reasons for discrepancies is that you have looked at your Vantage Score credit score, while the lender has checked your FICO score (the reverse is also possible, though less likely).
What are the differences between FICO and Vantage Score credit scores? Let’s take a closer look so you can understand these financial metrics.
The credit scores most borrowers are most familiar with by name is their FICO score. FICO has existed since 1989, so it has a longstanding history.
FICO also is the most common credit score for lenders to use when they check up on a borrower’s risk profile. Third party-audited FICO company data suggests that around 9 out of 10 lending decisions rely on FICO credit scores.
In most cases, it costs money to view your FICO score. For example, if you go through Experian’s Credit Works program, you can pay one dollar to receive your credit report as well as your FICO score.
This is quite reasonable, but if you fail to cancel your membership during the trial period, you will be automatically billed for $21.95 per month.
Some banks and credit unions may provide you with an opportunity to view your FICO score for free or for a nominal fee.
The most important factor in calculating your FICO score is your payment history. If you have been paying off your loans and credit cards on time and in full, that goes a long way towards raising your FICO score or maintaining it.
Another very important factor in calculating your FICO score is how much debt you currently owe. How long you have been utilizing credit is also considered. The least important factors include the diversity of your credit types as well as any recently opened accounts.
Now let’s talk about Vantage Score. Although this name is less well-known than FICO, many consumers online have viewed their Vantage Score credit scores.
Vantage Score is a relative newcomer on the credit tracking scene compared to FICO. It has only been around since 2006.
The reason why many borrowers have seen their Vantage Score credit scores is because these are the scores displayed by Credit Karma through its free service.
This is a popular site and service, so it receives a lot of use. Unfortunately, many consumers do not realize that they are not looking at their FICO score when requesting their score through Credit Karma.
This can lead to confusion—and sometimes mishaps—when applying for mortgages or other lending products. You might, for instance, assume that your FICO score is higher than it really is if all you have seen is your Vantage Score credit score.
Vantage Score weighs factors differently when calculating credit scores. Although payment history is still the most important factor, the amount of outstanding debt is considered less important than credit diversity, credit utilization and how long you have had your accounts. Credit available, the latest hard credit checks, and other recent events are given the least weight.
If you are having a difficult time understanding your different credit scores, need help raising your score before applying for a mortgage, or are looking for competitive loan offers regardless of your credit, Grandview Lending can help.
As a leading mortgage broker in Indianapolis, we can connect you with a wide selection of lending products to help you find the most affordable rates. Schedule your consultation today by calling (317) 255-0062. We look forward to qualifying you for the competitive financing you need.
We provide our clients with exceptional service and integrity which has become our hallmark.