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If FICO Reigns Supreme, Why Monitor VantageScore At All?

May 15th, 2014 · No Comments · Credit Repair

by Kristy Welsh

(Last Updated On: February 26, 2018)

If FICO Reigns Supreme, Why Monitor VantageScore At All?With FICO scores reportedly used in 90 percent of lending decisions, it’s no wonder consumers question the importance of the alternative VantageScore system. In fact, many consumers aren’t even aware there’s a difference; a credit score is a credit score.

On the contrary, FICO Scores are different from VantageScores, and there are multiple versions of each.

To compete with the all-important FICO Score, which dates back decades, the three major credit bureaus created their own scoring model in 2006. While the same algorithm is used by each bureau to compute your VantageScore, it may differ from one reporting agency to the next, dependent on what is on each of your credit reports with Experian, TransUnion, and Equifax.

But if FICO reigns supreme, why bother monitoring the VantageScore at all?

1) Lenders do look at your VantageScore.

While FICO boasts that 90 percent of lending decisions are influenced by the FICO score, VantageScore has some pretty impressive stats to boast about too. As stated on the VantageScore website, “Over 2,400 lenders and other industry participants—including 20 of the top 25 financial institutions—used VantageScore credit scores from July 2015–June 2016.”

In fact, it’s not uncommon for lenders to look at both scores. Why? For one thing, the VantageScore mostly focuses on credit history over the past 24 months. This gives lenders a more predictive scoring model for use with consumers whose credit history is relatively short.

Plus, FICO and VantageScore weight credit behavior differently.

Your FICO score is based on:

  • 35 percent payment history
  • 30 percent amount owed
  • 15 percent length of credit history
  • 10 percent new credit
  • 10 percent types of credit in use

Your Vantage score is based on:

  • 32 percent payment history
  • 23 percent utilization
  • 15 percent recently reported balances
  • 13 percent depth of credit
  • 10 percent recent credit
  • 7 percent available credit

In other words, FICO and Vantage Score can provide lenders with very different pictures of a potential borrower’s creditworthiness, both of which can be helpful in making more comprehensive lending decisions.

2) You can monitor your VantageScore for free.

Unless you are an account holder with one of the credit card companies now offering FICO scores for free with monthly statements, your FICO score is something you have to buy via myFICO.com. (Discover is an exception, offering a complimentary FICO Score to anyone.) As for your VantageScore, you can monitor it for free via numerous credit monitoring sites.

3) Tracking the ups and downs of your VantageScore gives you a good indication of your overall credit health.

Since you can easily and continuously monitor your VantageScore for free, it’s a great way to keep a constant eye on your current credit standing. This can prove especially important if you are trying to improve your credit, so that you can qualify the effectiveness of your efforts and make tweaks accordingly. While your VantageScore will never be the same as your FICO score, month-to-month monitoring will alert you to any spikes or dips that are likely impacting your credit scores across the board.

That said, it’s important to know your FICO score too. Make it a habit of purchasing your FICO credit score at least once a year, a habit you can easily foster by doing so at the same time you request your free annual credit reports.

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