FICO and VantageScore Credit Scoring Models

FICO and Vantage are two scoring methods used by the credit bureaus to indicate a person's credit rating. The FICO score was developed by Fair, Issac and Company and is the most popular scoring method today and is used by most lenders to determine credit worthiness. VantageScore is a relatively new scoring system created through a combined effort of the three major credit bureaus in order to come up with a score which would be more consistant across bureau reports.

To help you better understand each system better, we have outlined the high points of each method below. Don't forget, by law you are entitled to a free copy of your report from each bureau. You can get those reports at www.annualcreditreport.com.

FICO Score

FICO scores range between 350 and 850 points, and are computed as follows:

Payment History – Contributes to 35% of your score

• Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
• Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
• Severity of delinquency (how long past due)
• Amount past due on delinquent accounts or collection items
• Time since past due items (delinquency), adverse public records (if any), or collection items (if any)
• Number of past due items on file
• Number of accounts paid as agreed

Amounts Owed – Contributes to 30% of your score

• Amount owing on specific types of accounts
• Lack of a specific type of balance, in some cases
• Number of accounts with balances
• Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
• Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Length of Credit History – Contributes to 15% of your score

• Time since accounts opened
• Time since accounts opened, by specific type of account
• Time since account activity

New Credit – Contributes to10% of your score

• Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
• Number of recent credit inquiries
• Time since recent account opening(s), by type of account
• Time since credit inquiry(s)
• Re-establishment of positive credit history following past payment problems

Types of Credit Used – Contributes to 10% of your score

• Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)

VantageScore

VantageScore ranges between 500 and 999 points, and are computed as follows:

Payment History – Contributes to 32% of your score
Details the history of your payment behavior. Whether your payments have been delinquent, derogatory or satisfactory.

Utilization - Contributes to 23% of your score
The percentage of money that you owe, or that you have used. A large % of your available credit balances are seen as a credit risk.

Balances – Contributes to 15% of your score
This is the amount of recently reported balances, for both current and delinquent accounts. Balances that have increased recently can indicate a credit risk.

Depth of Credit – Contributes to 13% of your score
The length of your credit history and what types of credit you have/had. A long credit history helps give more information into how you manage your credit, and can have a positive effect on your VantageScore. They also look for a mix of various types of credit, such as credit cards, credit cards, auto loans etc.

Recent Credit – Contributes to 10% of your score
The number of credit applications and inquires made. Applying for a number of new accounts recently can indicate a credit risk.

Available Credit – Contributes to 7% of your score
The total amount of available credit you have. Low balances can demonstrate good credit management and a low risk. High balances can indicate potential overuse and can have a negative impact on your score.

Scorecards were scaled consistently across each credit reporting company to create a score range from 501-990 that accommodate natural A, B, C, D, and F grade intervals. Note that there is no E grade.

901 – 990 = A “Super Prime”
If you are within this group, you will be in the top 11% of the population and viewed as very low risk. Which means that you will probably get the best rates and offers from lenders.

801 – 900 = B “Prime Plus”
In this range you are seen to have good money management and are in the top 40% of the population. Lenders will offer “good” rates and offers to people in this range.

701 – 800 = C “Prime”
You are in the top 60% of the population and seen as “creditworthy”. You may get reasonable offers from lenders but some may want to review your credit history more in depth and may require additional documentation from you.

601 – 700 = D “Non Prime”
In this range you are within the LOWEST 38% of the population and will be viewed as a high risk by lenders. Lenders may offer you credit but it will be at less favorable rates.

501 – 600 = F “High Risk”

You are in the LOWEST scoring 19% of the population, and viewed as a VERY RISKY GROUP. Many lenders will NOT extend credit to you. Other may extend credit but may require security deposits and your interest rates may be higher in order to compensate for the high risk.