Did you know you have multiple credit scores? Creditors use the FICO Score and VantageScore to determine your credit worthiness. Depending upon the type of credit application, the creditor uses either the FICO Score or VantageScore. You may review your credit score and notice that it varies from one to the other. Let’s take a deeper look at each credit model.
VantageScore
This score was created by the three credit bureaus Equifax, Transunion, and Experian. The VantageScore was derived to determine how likely you are to repay money borrowed. This score can be as low as 300 and as high as 850. The lower the score, the least likely you are to repay borrowed money. “A 2019 third-party market study found that VantageScores are widely used by credit card issuers, and secondly by both installment loan and fintech lenders.”
FICO
The Fair Isaac Corporation created the FICO score using five areas to determine its credit score. For consumers, the FICO score is defined by payment history, debt obligation, credit mix, credit history, and new credit accounts. The score ranges from 300 to 850, with 850 considered a “perfect” credit score. FICO scores are widely used by creditors, and a score in the range of 670 to 739 is considered good. Scores below 670 are likely to experience higher interest rates or unapproved credit applications. Scores above 739 have high approval odds and more likely to receive lower interest rates.
Personal Credit Score Tip- Keep credit lines lower than 30% utilization to help your credit score.
Sources:
Brock, T. B. 202, Investopedia, FICO Score, <https://www.investopedia.com/terms/f/ficoscore.asp>
