Vantage Score vs FICO Score - Which One Should You Use?

Good credit scores are becoming more important than ever especially, with the state of economy at the moment. Banks are not making it as easy to borrow as they use to and the credit score is playing a more influential role in deciding whom they lend to. Therefore, it's a good idea to learn and understand as much as you can about the credit scoring system.

Up until March 2006 there was only one type of credit scoring system used by the banks and that was called the FICO system. FICO is short for the Fair Isaac Corporation. This credit scoring system was established to help banks and other lenders to gauge the risk of lending credit to consumers.

The three major credit bureaus Experian, Transunion and Equifax created another scoring system called the Vantage score. The main reason behind the creation of this new score was to add consistency between each of the bureaus scoring results.

The Difference Between The Vantage Credit Score and Fico score

Since the introduction of the two credit scoring models there has been a growing debate about the Vantage score vs FICO score question. The important point to make clear is that both these systems are not for the benefit of you the borrower. They are to help the banks determine how risky you are to lend to.

Although each system has the same aim there are differences in how a persons credit score is calculated. It has to be given a value to give it meaning otherwise its just a 3 digit number. The numbers are measured on what is called a credit score scale. This scale is basically a ranking system that measures the scores value.

When it comes to Vantagescore vs fico score the main difference is the number ranges between the two systems. The FICO score formula is based on a range between 300 and 850. The Vantage has a range between 501 and 990. Although the number ranges are different the rationale behind the two is the same.

A person with a higher credit rating will be considered a good credit risk compared to someone who has a lower rating. Where you rank can make a huge difference in the cost of borrowing especially with a long term mortgage. If you are a high risk the banks will offset that by raising the interest rates on your loan payments.

Another difference is the Vantagescore grades their results with a letter similar to a school report card as follows:

Vantage Score Range

Grade

Assessment

901 – 990

A

Super Prime

801 – 900

B

Prime +

701 – 800

C

Prime

601 – 700

D

Non Prime

501 – 600

F

Sub Prime

Each scoring system assesses a potential borrowers credit risk by taking into consideration a number of financial criteria contained in their credit file. With the Vantage scoring system there are six criteria whereas the FICO system uses five. Each of these criteria are weighted in terms of importance which can either raise or lower your credit score. You can see the comparison from the following tables:

Vantage Score Criteria

Criteria
Weighted %

Payment history
32

Utilization
23

Outstanding balances
15

Length of credit
13

Recent credit
10

Available credit
7

FICO Score Criteria

Criteria

Weighted %

Payment history
35

level of debt
30

age of credit history
15

types of credit
10

credit inquiries
10

Vantage Credit Score vs Fico Score - Which Is Better?

There may be slight differences in the way they report their scoring results and the criteria used to arrive at those results however, at the end of the day both achieve the same thing. They are so similar that FICO actually tried to sue Vantage Score Solutions, the company behind the Vantage scoring system, for trademark infringement however, the law suit was over ruled.

You could argue, that because Vantage uses a letter grading system their scoring results are easier to understand. The best way to answer the question is with another question? Which scoring system does your proposed lender use? When you plan to borrow contact the lender and ask them which system they use as not all banks use the same one. If they use the Vantage system then you can contact Experian to obtain your Vantagescore which will involve a fee.

The Vantage Score vs Fico Score debate is sure to continue especially as we become more dependent on credit. However, the two key factors that can improve your credit score is reducing your levels of debt and ensuring the information contained within in your credit report is correct and up to date. You can obtain a free credit report from all three bureaus from annualcreditreport.com to check this.

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