A three-digit series of numbers; a figure that makes a significant impact on your life in many ways; a storyteller that communicates to creditors about your financial history and your credit risk. The credit score.
Have you ever noticed that the credit score that your lender provides you differs from your online credit score? That's because not all financial institutions and credit agencies rely on the same credit reporting models. We know you want to be financially savvy, so we're going to bring you up to speed on the two main types of credit scoring models: VantageScore and FICO Score.
How are VantageScore and FICO Credit Scores the Same?
Both VantageScore and FICO models use a range of 300 – 850. A higher score makes qualifying for a loan and getting a better rate much more likely with both models. Additionally, a history of late payments and maxed-out credit cards can lower your score, so setting up automatic payments is always a good idea. hint hint
How are VantageScore and FICO Credit Scores Different?
Developed by the three major credit bureaus - Experian, TransUnion, and Equifax, VantageScore can initiate a score even with minimal information, usually just about a month after opening a credit account. The FICO Score model was developed by what was then called Fair, Isaac, and Company. FICO is unable to develop a credit score for credit accounts less than six months old.
These scoring models also differ in the way your score is calculated. VantageScore places significantly more weight on late mortgage payments and more importance on having a mix of credit types. Meanwhile, FICO Score places more weight on payment behavior and how you're using your credit limits.
While the concept of a credit score can be complex, all in all, exhibiting responsible money habits and good payment behavior will be instrumental in giving you a favorable credit score.
Check out the new Vibe Credit Union Free Credit Score Monitoring tool! You can access your credit score within both Online and Mobile Banking, see what's helping and hurting your credit score, and even get recommendations on what will improve it.
