When you check your credit score from different credit reports, it will vary. This is because each credit report has a system of rating your credit worthiness. As a result, the number will vary slightly or widely depending on the credit rating type you are looking.
Currently, there are two main credit rating models used in the United States. You have Vantage score and FICO credit score. What makes each one unique?
Well, an apartment is likely to access a Vantage credit score before deciding to rent out to you. On the other hand, 90% of American lending institutions will access your FICO score to rate your credit worthiness to receive loans. I observed this seems to be the standard for financial institutions.
So how accurate your FICO credit score is, depends on quite a number of credit scoring factors. This includes credit errors, how it was calculated and reports of payments or utilization. Here is what this would mean for you.
What Does A FICO Score Mean?
A FICO Score reflects your credit worthiness. Lenders will always look at your credit worthiness, before agreeing to give you loans. Also, whatever FICO credit score shows, may influence the terms and interest rate a lender may give you a loan at.
So, what does a high FICO Score mean?
A high FICO score means you will get access to loans with a low or a reasonable interest rate. Hence, why I advise young adults to work on their FICO score rather than Vantage score prior to applying for loans and credit cards. Just because your Vantage score is high, does not mean your FICO score is high.
There are factors which affect a FICO score. Below are the factors:
- payment history contributes 35%
- credit utilization contributes 30%
- Your credit history contributes 15%
- A new credit will contribute 10%
- Having a credit mix (credit cards, auto loans, mortgage) will improve your FICO score by 10%.
The above contribute to whatever your current FICO score is. If any of the above is reported wrongly by the credit bureau, then the credit score assigned would be wrong. On How To Dispute Errors On Your Credit Report Successfully, I talked about how I had to dispute an error on my credit score. This is because a new credit card was added to my history without me applying for one.
Oh yes.
Credit errors happen sometimes. After all, the credit bureaus compiling a credit report on you are just as humans as you are. So every now and then, they make a mistake. Whenever they do, such a mistake could result in an inaccurate FICO score.
Who Uses FICO Credit Score
FICO Score is used by lenders. About 90% of lending institutions in the US, will look up your credit score using FICO credit model. Not only lenders, but also the following financial institutions below:
- Mortgage companies
- Banks
- Investment banks
You probably have seen discrepancies in credit score, when you access your FICO Score and the credit score presented on apps like Credit Karma. It does not mean your FICO Score is inaccurate. It is just most credit score apps will use Vantage score to present your credit score. If this is so, what is the difference between FICO scores and credit scores?
FICO VS Credit Score
FICO is a credit score, but it is not the only credit score used to measure your credit worthiness. Between FICO vs credit score, I think FICO is more important compared to Vantage score. Vantage score is the other credit score which is presented to you, when you access your credit score through credit score apps.
Why do I think so, my good reader?
Well, FICO credit score is reliable. It is the same reason why FICO Scores are used by lenders. By lenders here, I refer to banks, auto loan lenders, credit card companies and other financial institutions.
I want you to think about a FICO Score as the standard for credit score measurement. Personally, a FICO Score is the most accurate credit score. This explains why banks and lenders check FICO scores.
Below are some major differences between credit score and FICO Score. These are based on what factors contribute to your credit score for the two models.
| FICO Score | Vantage Score |
|---|---|
| 35% payment history | 40% payment history |
| 30% credit utilization | 30% of Amount owed |
| 15% credit history | 15% length of credit history |
| 10% new credit | 10% new credit |
| 10% credit mix | 10% credit mix |
| 11% Balance |
As you can see from the above, the contributing factors to credit score is how FICO scores differ from Vantage score. Not sure why FICO Score is preferred by lenders. But, I suspected it is the standard for American financial institutions. I would work on my FICO Score, rather than Vantage score if I were getting ready to borrow a loan or get something financed by a lender.
Where To See FICO Score?
Credit errors are the reason why I always recommend people check their credit report every year. You are entitled to one free annual credit report. I explained where you could get this on where to check your credit score for free article.
Anyways, you can see your FICO score for free through your bank. Sometimes, some banks’ mobile apps have the option for you to view your FICO score. It is important to attempt to try it through your bank.
Otherwise, you can go to MyFico website to see your credit score. MyFico has three tiers of membership accounts. You can use the free plan to see your score. It lets you see your FICO credit score, credit report and credit monitoring at no cost to you.
Finally, do not use credit karma to check your FICO Score. Credit Karma will show your Vantage score. The same goes with most credit score apps. So, I want you researching what model of credit score a credit check app uses, before going for it. It eliminates you being disappointed, when you go to a lender and it informs you of a lower credit score than what your credit score app had shown you.
So, what is my conclusion on this article?
A FICO credit score is accurate. It is why 90% of American lenders use to run a background check on you. Personally, I think it is credit score check standard of the banking industry. I recommend you work on your FICO Score, rather than Vantage score before going to borrow a loan. It is what banks will look up.
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