For the majority of general lending decisions, such as personal loans and credit cards, lenders use your FICO Score. Your FICO Score is calculated by the data analytics company Fair Isaac Corporation, and it's based on data from your credit reports. VantageScore, another scoring model, is a well-known alternative.
Although VantageScore credit scores have been around for about 15 years, the FICO Score is still the preferred choice of most lenders. In the U.S., lenders use FICO Scores in 90% of lending decisions.
A 2019 third-party market study found that VantageScores are widely used by credit card issuers, and secondly by both installment loan and fintech lenders. According to the study, nine of the 10 largest banks and 29 of the 100 largest credit unions used VantageScore credit scores in one or more lines of business.
While VantageScore and FICO now use the same 300-850 range, VantageScore tiers run about 50 points lower than FICO tiers.
VantageScore counts multiple inquiries, even for different types of loans, within a 14-day period as a single inquiry. Multiple inquiries on your reports for the same type of loan or credit, spanning more than a 14-day period, may have a greater impact to your VantageScore® credit scores than to your FICO® scores.
The Score Ranges
The base FICO® Scores range from 300 to 850, while FICO's industry-specific scores range from 250 to 900. The first two versions of the VantageScore ranged from 501 to 990, but the latest VantageScore 3.0 and 4.0 use the same 300-to-850 range as base FICO® scores.
What Credit Score Do Lenders Use? The two main companies that produce and maintain credit scoring models are FICO® and VantageScore. Lenders most commonly use the FICO® Score to make lending decisions, and in particular, the FICO® Score 8 is the most popular version for general use.
FICO Score Conversion. There is no official method of converting a VantageScore to a FICO score. Because each scoring uses different criteria and methods of pulling data, it's nearly impossible to convert. However, keeping both scores in mind can give you a much more well-rounded understanding of your credit health.
What's a Good Score on the VantageScore 3.0 Model? The VantageScore model runs from 300 to 850. According to VantageScore, a good credit score on their model would be 661 to 780, and an excellent score would be anything above that.
FICO Score 8 is the most commonly used FICO credit score among lenders in the financial industry. This score ranges anywhere between 300 and 850.
It's recommended you have a credit score of 620 or higher when you apply for a conventional loan. If your score is below 620, lenders either won't be able to approve your loan or may be required to offer you a higher interest rate, which can result in higher monthly payments.
A score from 750 to 850 is considered to be excellent or super prime, while scores between 700 to 749 are considered to be good. Scores between 650 and 699 are viewed as fair, scores in the 550 to 649 range are poor, and 300-549 are very poor scores.
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“If you're monitoring your score, that's a good thing,” said Jeff Richardson, a VantageScore spokesman. “And, VantageScore is directionally accurate and similar to other scores that will be used future lending decisions.”
Consequently, when lenders check your FICO credit score, whether based on credit report data from Equifax, Experian, or TransUnion, they will likely use the FICO 8 scoring model. FICO 8 scores range between 300 and 850. A FICO score of at least 700 is considered a good score.
The credit scores and reports you see on Credit Karma should accurately reflect your credit information as reported by those bureaus. This means a couple of things: The scores we provide are actual credit scores pulled from two of the major consumer credit bureaus, not just estimates of your credit rating.
Which credit scores does Credit Karma offer? The model used for credit scores on Credit Karma is VantageScore® 3.0. While VantageScore® credit scores aren't used as widely as FICO® scores for credit decisions, they can still give you a good idea of where your credit stands.
VantageScore typically only uses TransUnion and Equifax. The FICO score may use TransUnion, Equifax, or Experian. If you want to see the credit score that an auto lender or car dealership is going to see, then it's recommended to specifically find out your FICO credit score.
Your score can then differ based on what bureau your credit report is pulled from since they don't all receive the same information about your credit accounts. Secondly, different credit score models (and versions) exist across the board. As it states on its website, Credit Karma uses the VantageScore® 3.0 model.
Experian is the largest credit bureau in the United States. Still, it's not the only entity that houses consumer financial data. Equifax and TransUnion are the other major credit reporting agencies lenders, and creditors turn to for credit reports and scores used to make lending decisions.
FICO Scores are an industry standard
90% of top lenders use FICO Scores when making lending decisions. So when you apply for a loan, it's likely your lender will be checking your FICO Scores to determine how much you can borrow and how much interest you'll pay.
The FICO® Score versions used in mortgage lending and the more recently released versions, such as FICO® Score 9 and 10, have the same 300 to 850 range. VantageScore, a competing maker of credit scores, also uses that range for its latest VantageScore 3.0 and 4.0 model credit scores.
Some lenders report to all three major credit bureaus, but others report to only one or two. Because of this difference in reporting, each of the three credit bureaus may have slightly different credit report information for you and you may see different scores as a result.
To purchase a $300K house, you may need to make between $50,000 and $74,500 a year. This is a rule of thumb, and the specific salary will vary depending on your credit score, debt-to-income ratio, the type of home loan, loan term, and mortgage rate.