VantageScore vs. FICO: Key Differences Explained

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What Is VantageScore?

VantageScore is a company that develops consumer credit risk scores. These scores help banks, credit unions, lenders, and card issuers understand the likelihood that someone will miss a bill payment. They might rely on these scores when sending out credit offers, reviewing applications, and managing customer accounts.

Understanding VantageScore

The three major credit reporting agencies—Experian, TransUnion, and Equifax—created VantageScore in 2006. Since then, five credit scoring models have been released, with VantageScore 3.0 and 4.0 being the most commonly used. The latest model, VantageScore 4plus™, was announced in May 2024. All models have a score range of 300 to 850.

VantageScore Versions

• VantageScore 3.0
• VantageScore 4.0
• VantageScore 4plus

VantageScore 3.0

Released in 2013, VantageScore 3.0 was the first tri-bureau score to use the 300 to 850 range. It does not consider paid collection accounts. This version is often provided for free by personal finance websites and financial institutions.

VantageScore 4.0

Introduced in 2017, VantageScore 4.0 includes trended data, which considers changes and trends in your credit history. This model can score more people than conventional models, making it more precise for those with thin credit files. It is also set to become a required score for many mortgage loans.

VantageScore 4plus

The latest model, VantageScore 4plus™, allows lenders to consider additional data with your permission. This can help those with limited credit history by assessing cash flow and creating predictive insights. The process is quick and does not affect your other credit applications.

What Is a Good VantageScore?

A VantageScore of 661 or higher is generally considered good. However, lenders may have their own criteria and also consider factors like income and debt-to-income ratio. Therefore, a good VantageScore does not guarantee loan approval.

VantageScore vs. FICO Score

Both VantageScore and FICO scores predict the likelihood of a borrower becoming delinquent. They use similar data but may weigh factors differently. VantageScore models range from 300 to 850, while FICO scores can range from 250 to 900 for industry-specific models.

Why Your VantageScore Can Vary

Your VantageScore can vary based on the model used, the timing of the score, and the credit report analyzed. Different models and credit reports can result in different scores even if they are generated at the same time.

Do Lenders Use VantageScore?

Many lenders use VantageScore credit scores. For example, Synchrony Bank uses VantageScore 4.0 for evaluating card applications. Starting in 2024, many mortgage lenders will also use VantageScore 4.0 to comply with Federal Housing Finance Agency requirements.

How to Check Your VantageScore

You can check your VantageScore through your bank, credit union, lender, or credit card issuer. Personal finance websites also offer free score tracking. Additionally, you can get free credit reports from AnnualCreditReport.com, although these reports do not include a credit score.

How to Improve Your VantageScore

Improving your VantageScore involves similar steps to improving any credit score:

• Pay your bills on time.
• Keep your credit card balances low.
• Keep old credit cards open.
• Avoid frequent credit applications.
• Use different types of credit.
• Avoid taking on too much debt.

Additionally, you can use features like Experian Boost® to add rent, utility, and streaming service payments to your credit report, potentially improving your VantageScore.

Monitor Your Credit Regularly

Regularly monitoring your credit reports for changes and accuracy is crucial. With Experian’s free credit monitoring, you get access to your Experian credit report, monthly updates, and real-time alerts about important changes. Your Experian account also includes a free FICO® Score and score tracking.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to help you navigate your mortgage options with ease and expertise.

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