Today, we are inundated with warnings about our credit. It seems like each day a new story appears about some type of infiltration on a bank or store putting a consumer’s financial information at risk. So how can we protect ourselves? Start monitoring your credit especially if you are starting the process of purchasing or refinancing a home. Uncovering an issue before applying for a mortgage will go a long way towards peace of mind. For years the sole player in the market was FICO, but now a new player has emerged, VantageScore. While each service compiles data from Equifax, Experian, and TransUnion they take entirely different routes to arrive at your score.
Some of the key differences between the two are noted below, but my advice is to read “Heads Up, FICO: You’ve Got Company” in Money Talk News for further information.
- Collections: VantageScore only calculates unpaid accounts where FICO’s calculation includes both paid and unpaid
- Credit History: VantageScore floor starts at one-month with less frequent updates while FICO has a minimum six-month history and recent updates
- Inquiry: VantageScore allows only 14-day window for comparison shopping vs. FICO’s 45-day window
- Trade Line: VantageScore incorporates rental payments and utility bill history where those lines of credit are excluded from your FICO score
Since its arrival, VantageScore has opened up credit reviews for 30 million plus consumers with approximately 10 million of those consumers having a score of 600 or higher. Of course, whatever service a lender uses is at their discretion, but a competing service gaining market share will benefit all consumers in the long run.