Page 13 - Everything You Need To Know About Personal and Business Credit by Adrean Yancy

Everything You Need To Know About Personal & Business Credit

FICO vs. VantageScore

The two dominant credit scoring industries in the U.S. are FICO and VantageScore.
While there is no doubt that FICO is leading the industry, VantageScore has been
gaining more momentum since it was created by the three major consumer bureaus
(Equifax, Experian, and TransUnion) in 2006.

Even though the two models were created to gauge consumers' ability to pay a loan,
they have di erent ways of dealing with credit data.

Let us dive deeper to properly understand the two models and examine the
similarities and di erences between them.

Multiple Credit Scoring Model: To analyze credit reports, both FICO and
VantageScore have created a series of software that generates credit scores based on
the analyzed reports. However, despite having di erent model criteria, their main aim
is to predict whether a person will fall at least three months behind in the payment of a
bill within the next 365 days.

Also, both (VantageScore and base FICO models) scoring models are for general uses.
Di erent creditor industries have been using both. These industries include student
loan companies, the online lenders' industry, and those in the credit card issuers'

industry.

FICO, however, has industry-speci c credit score models that are being used in the
auto loan, mortgage loan, and credit card industries. These industry-speci c software
models are designed and customized for auto, mortgage, and card issuers.

The rst VantageScore model was version 1.0, which was released when it was created
in 2006. And the most recent version, version 4.0, was created in 2017.

FICO, the base version, on the other hand, was rst released in 1989, FICO Score 8 in
2004, and FICO Score 9 a decade later.

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