![\"FICO](\"https:\/\/www.creditrepair.com\/blog\/wp-content\/uploads\/2017\/12\/CreditScoreDifference.jpg\")
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A credit score can sometimes seem like a mythical creature. In what land does it live? What powers does it have? And what kind of wizard created it?<\/p>\n
In reality, credit scores are derived from credit-scoring models \u2014 that is, formulas that calculate our creditworthiness and then assign a numerical value to it. If this still sounds like magical gibberish to you, let\u2019s make it simpler.<\/p>\n
We\u2019ve all got three-digit credit scores based on our borrowing and payment history. Most of us think we have just one. In fact, there are hundreds of credit-scoring models<\/a> in use today. Each credit score uses slightly different criteria to cater to different lenders and businesses.<\/p>\n It\u2019s not feasible or even necessary to know about every score since you may never encounter some of them. But there are two scoring models that are the most common and therefore important to understand: FICO and VantageScore. When you think of your credit score, chances are good you\u2019re thinking about one of these.<\/p>\n While these two scoring models use similar criteria and are often seen as direct competitors, there are some differences. Let\u2019s discuss what goes into FICO and Vantage credit scores and how they differ from each other.<\/p>\n The first FICO (Fair Isaac Corp.) scoring system was established in 1958<\/a>, with its first credit bureau risk score introduced in 1981 and made available to the largest credit bureaus in 1991. Since then, the FICO score has become the gold standard for many lenders when assessing credit risk.<\/p>\n FICO scores are commonly used for major purchases such as home mortgages and car loans, but are also widely used for other types of credit and loans as well.<\/p>\n A FICO score is a three-digit number ranging from 300 to 850 (a newer version reportedly goes up to 950), with 300 at the low or \u201cpoor\u201d end and 850 at the high or \u201cexcellent\u201d end. A FICO score above 670 is generally considered good. If your score is in this range, you can probably get approved for loans and get reasonable and even low interest rates. On the other hand, anything below 670 is considered a bad credit score<\/a> and makes it harder to get a reasonable interest rate. And a very low score \u2014 usually at or below 600 \u2014 means you could be denied a loan altogether.<\/p>\n FICO uses five different categories<\/a> to calculate the score. Here\u2019s a breakdown by percent:<\/p>\n Since payment history matters the most in a FICO score, it\u2019s always in your best interest to make all your payments on time and in full.<\/p>\n VantageScore was established in 2006<\/a> by the three credit bureaus<\/a> \u2014 Experian, TransUnion, and Equifax \u2014 to provide \u201ca more consumer-friendly alternative\u201d to the FICO score. VantageScore takes into account some non-traditional information and gives less weight to certain factors than FICO does, but hasn\u2019t yet reached FICO\u2019s popularity.<\/p>\n Just like FICO, a VantageScore is three digits. The newer version \u2014 VantageScore 3.0 \u2014 ranges from 300 to 850 as well, with the lower end signaling poor credit and the higher end signaling excellent credit.<\/p>\n VantageScore uses six categories<\/a> to calculate its score. Here\u2019s a breakdown by importance:<\/p>\n Just like with a FICO score, it\u2019s important to your VantageScore to make your payments on time. But the percentage of your credit limit you\u2019re using carries a lot of weight, too. Make sure to keep that ratio in the recommended 30 percent or less range.<\/p>\n There are several important differences between the two credit scores that may impact you:<\/p>\n It\u2019s a good idea to check your credit report yearly, not only to know what your score is and if you need to make improvements, but to catch any errors. Inaccuracies and old information can often be found on credit reports and adversely affect your credit score. If you need help finding and addressing issues that could be damaging your score, talk to a credit repair service<\/a>.<\/p>\n And remember that while there are many credit scores out there, understanding at least the basics of FICO and VantageScore will help you know how to earn and keep good credit. Making all your payments on time and keeping your credit balances low are positives for both your FICO and VantageScore numbers.<\/p>\n If you\u2019d like a free review of your credit report and and personalized credit assessment, contact CreditRepair.com<\/a> today.<\/p>\n Carry on the conversation on our social media platforms. Like and follow us on Facebook<\/a> and leave us a tweet on Twitter<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" A credit score can sometimes seem like a mythical creature. In what land does it live? What powers does it have? And what kind of wizard created it? In reality, credit scores are derived from credit-scoring models \u2014 that is, formulas that calculate our creditworthiness and then assign a numerical value to it. If this […]<\/p>\n","protected":false},"author":32,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[58],"tags":[39,67,41,124,263],"yoast_head":"\nAll about FICO<\/strong><\/h2>\n
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All about VantageScore<\/strong><\/h2>\n
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How FICO and VantageScore are different<\/strong><\/h2>\n
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Know your credit score<\/strong><\/h2>\n