There are two main types of credit scores lenders and creditors use to evaluate applicants and manage customers’ accounts: FICO® and VantageScore®. These scoring models both use a credit range of 300 to 850, with a higher number indicating greater creditworthiness. However, FICO and VantageScore use slightly different criteria to determine your scores, which lead to slightly different results.
At Salary Finance, we use VantageScore, alongside a variety of other criteria such as employment tenure and income, to assess all loan applications.
VantageScore groups your credit information into six core categories, and describes each of these in terms of influence, rather than percentage, as FICO does.
FICO groups the information into five categories, with each one representing a percentage of your score.
While the criteria for both credit scoring models is similar, there are some key differences in the ways they use that data that can affect your scores.
In order to have a FICO score, you need to have one or more accounts that have been open for at least six months. The VantageScore model is often able to provide a score to consumers who are newer to credit or use credit less frequently. That’s because VantageScore can use data of just one month’s history and one account reported within 24 months. As a result, if you’re new to credit or you haven’t used credit in a while, you may not have a FICO score, and are more likely to have a VantageScore credit score.
FICO and VantageScore treat credit inquiries differently as well. Newer FICO versions count multiple inquiries for the same type of credit within a 45-day period as a single inquiry, so that you can shop around for a major loan with less impact to your credit score. VantageScore counts multiple inquiries, even for different types of credit within a 14-day period, as a single inquiry.
Note: according to the Consumer Financial Protection Bureau, mortgage loan inquiries within a 45-day period are recorded as a single hard inquiry.
Past-due accounts sent to collection agencies may impact both your FICO and VantageScores. FICO generally ignores smaller collections amounts, if the original balance is below $100. VantageScore doesn’t factor in paid collections, but includes all unpaid collections regardless of amount.
While there are differences between FICO and VantageScore, both scoring models try to predict your creditworthiness using the same underlying data. If you focus on building a good credit history, you can improve all of your scores.