Differences, Advantages & Disadvantages
Your credit history and your credit score play a significant role in a lenders determination of your financial risk. While there are many other factors which lenders may also take into consideration, evaluation of risk will often rely heavily on your credit score. Because every lender uses their own specific risk assessment criteria and methodology, consumers often have confusion regarding their precise financial position. This is particularly true in cases where the consumer is seeking credit from multiple or competing lenders. As such, while your credit report and credit score are good starting points to grasp a general overview of credit status, they are not necessarily definitive, in terms of a specific lender’s standards.
If you intend on securing a substantial amount of credit, such as for the purchase of a home secured by a mortgage, a Nevada loan officer is best able to explain the lending criteria utilized by specific lenders. The following contribution by Las Vegas Custom Loans is presented to provide clarification to consumers regarding the two most common scoring valuation techniques employed by lenders: FICO score and Vantage Score.
- What is my FICO Score?
The term FICO actually stands for Fair Isaac Corporation. This form of score valuation utilizes the data provided from each of the three credit reporting agencies and formulates a numerical score, ranging from 300 to 850, with 300 being the least desirable score. Historically, FICO is the most widely accepted scoring standard used by lenders in determining risk.
- What is my Vantage Score?
Vantage score valuation is a more recent development. Like a FICO score, a Vantage score also assigns a numerical value, but additionally provides a letter grade using an A to F scale. A key distinction between a Vantage score and a FICO score, is that it utilizes a numerical range of 501 to 990, with 501 being the least desirable score, in contrast to FICO’s 300 to 850 range. Consumers should be cautious not to confuse the two scores, because a high score with Vantage may appear to be a perfect FICO score, and those with a perfect FICO may mistakenly interpret a Vantage score.
- What are some of the advantages and disadvantages for FICO and Vantage scores?
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Scoring standard
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FICO
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VANTAGE
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Minimum # months credit history required to obtain credit score
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6 months history
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1 month of history
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Recent credit activity required to obtain score
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Activity on at least one account within 6 months
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Activity on at least one account within past 2 years
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Treatment of late payments
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All late payments, regardless of account type, have same score impact
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Penalty on score for specific late payments, such as a mortgage
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Treatment for multiple inquiries within single time span (deduplication method)
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Multiple inquiries within a 45 day span are treated as a single inquiry
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Multiple inquiries within a 14 day period are treated as a single inquiry
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Limitation on loan type for single inquiry (deduplication) determination
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Applies to mortgage, auto & student loans
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Applies to all types of credit accounts
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Treatment of Third-party collection: Debt minimum for same score impact
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Debts over $100 are treated the same
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Debts over $250 are treated the same
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Treatment of Third-party collection: Score impact for debts under minimum
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Debts under $100 have no effect on score
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Reduced scoring impact on debts under $250
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If you have questions concerning lending criteria,
please contact Casey Moseman at 702-271-1274