One of the most frequently asked by many of our clients trying to find their way out of credit card debt is “What’s the deal with all these credit scores? Why are some different than others? And how the hell can I tell which one actually matters?”
Okay, so that’s actually 3 different questions, but they all highlight just how confusing the credit score model is to consumers who are just trying to learn how to fix credit so they don’t have to worry about a seemingly arbitrary number determining whether they’ll get the best rates on a loan or wind up in need of credit repair services until they can raise their score high enough to hop on the ride with the rest of us.
But in order to do that, we’ll need to take a look at the top credit scoring systems, FICO and the newer, lesser-known VantageScore model.
For the longest time, FICO was the only credit score you needed to know, and the only score you needed to worry about if your credit history wasn’t up to snuff and you found yourself in need of debt relief. Now, under the VantageScore system, many who have found that their otherwise top-notch credit rating doesn’t seem quite as high as FICO would have them believe.
Many who thought their score was untouchable are now seeing a new number lower than the other one and fear they’re now suddenly being deemed as more of a potential credit risk than they really are.
So what’s the difference?
There isn’t one, at least not a major one. Most people who have looked into their FICO score will find a similar number in their VantageScore as well, no matter how high or low their actual credit history may be. If one number is slightly higher than the other, it doesn’t necessarily mean you’ve suddenly become a credit risk to lenders and creditors.
One reason for the difference in digits between the scoring models is VantageScore claims their credit score offers a distinct advantage to those who have a smaller credit profile – that is, people who don’t have a lot of credit accounts in their profile, or who don’t use the lines of credit they have open to them as often as they should. By placing this much emphasis on the individual credit tradelines, it becomes a little easier to see why someone’s Vantage score is slightly lower than their FICO number.
At the end of the day, one isn’t necessarily “better” than the other (though most lenders and creditors still stick to the FICO model). If you have good credit with one, you essentially have just as good a score with the other and the same holds true for bad credit as well. The real concern should be removing negative items from your credit report and raising the numbers themselves, rather than which is better than the other.
