馃攳
FICO vs VantageScore: Which Credit Model Is Most Important & Is It Only FICO That Matters? - YouTube
Channel: RentReporters
[0]
did you know that there is more than one
[1]
scoring model to calculate your credit
[3]
score
[4]
the two models used to calculate your
[5]
score are fico and vantage score and
[7]
lenders may look at one or both of them
[9]
when making decisions to issue credit or
[11]
to approve you for loans
[12]
on top of that there's different
[13]
versions of fico and vantage score like
[15]
fico 8 which is the most common but it
[17]
isn't the model that most lenders use
[19]
when checking you out for a mortgage
[21]
loan that's typically going to be the
[22]
fico 4 model
[23]
and then there's also the vantage score
[25]
3.0 which is where your credit karma
[27]
score currently comes from
[28]
but vantage score 4.0 is already out and
[31]
gaining traction with certain lenders
[33]
so what does this all mean for you as a
[35]
consumer hey everyone this is cody with
[37]
rent reporters and that is a whole lot
[38]
of information so let's go over the
[40]
differences between the models
[42]
how the scores are calculated what you
[44]
really need to pay attention to
[45]
and what you don't need to worry about
[47]
so at the most basic level
[49]
fico is a model developed by a company
[51]
called the fair isaac corporation which
[53]
was first introduced way back in 1989.
[56]
advantage score was developed by the
[58]
three major credit bureaus experian
[60]
transunion and equifax and was
[61]
introduced in 2006.
[63]
these companies gather data from a bunch
[65]
of different sources your credit card
[66]
payments your car payments student loans
[68]
houses
[69]
in order to predict someone's ability to
[71]
repay a debt in order to help banks and
[73]
brokers make
[74]
lending decisions do you get approved
[76]
for the loan yes or no and if so
[78]
what is your interest rate going to be
[80]
now it's really important to note that
[82]
while they're separate companies with
[83]
separate models
[84]
they actually all share data with one
[86]
another fica for example bases its
[88]
scoring model on credit reports from
[90]
millions of consumers
[91]
and where to get that data from experian
[94]
transunion and equifax
[96]
but even though they use a lot of the
[97]
same data in their models they don't
[99]
treat the data the same which is why
[100]
there's so many different types of
[102]
models
[102]
fico and vantage score both use the same
[105]
five credit score factors to calculate
[106]
your score but there's some differences
[108]
in the weight of each category and in
[110]
some of the specifics of what they look
[111]
at
[112]
so let's check those out and then go
[114]
over what you really need to focus on
[115]
when building your credit
[117]
first up is liking and subscribing to
[119]
our channel it just takes a second and
[120]
it helps us reach new audiences who are
[122]
trying to improve their personal
[123]
finances by hitting that little thumbs
[125]
up button and subscribing you're
[126]
actually helping someone else
[128]
out who's in need of valuable
[129]
information so really liking and
[131]
subscribing to our channel can actually
[132]
count as your good deed for the day
[134]
all right so actual first up is payment
[137]
history which is always the most
[138]
important category
[140]
when looking at your payment history
[141]
fico and vantage score both consider how
[143]
late your late payments are
[144]
the number of accounts with late
[146]
payments and the number of payments
[147]
missed on an account
[149]
but what's different is that fico treats
[151]
all late payments
[152]
the same vantage score however gives
[154]
different weights to different types of
[156]
late payments a missed mortgage payment
[158]
for example
[159]
hurts your score way more than a missed
[161]
credit card payment both are still bad
[162]
though
[163]
next is length of credit fico advantage
[166]
score will both calculate the length of
[168]
your credit history as an average
[170]
age but it takes less time to establish
[172]
a credit score with vantage score than
[174]
with fico
[175]
so if you open up a new credit account
[177]
and you have zero credit history you can
[179]
actually go from having no score to
[181]
having a score with advantage score in
[182]
just one to two months
[184]
fico on the other hand requires at least
[186]
six months of credit history and at
[187]
least one account needs to be reported
[189]
to one of the three credit bureaus
[191]
within the last six months
[192]
again equifax transunion or experian
[196]
now let's look at the types of credit
[197]
category both fico and vanity score
[199]
reward you for having a diverse credit
[201]
profile with different types of trade
[203]
lines on your credit report
[205]
trade lines can be car loans student
[206]
loans credit cards or even your rent if
[208]
you use rent reporters
[210]
vantage score considers recurring
[212]
payments like rent utilities and phone
[214]
bills meaning that you can get a credit
[215]
score even if you have very limited
[217]
credit history
[218]
fico 8 and earlier only consider
[220]
mortgages auto loans and student loans
[222]
fico 9 and 10 however do calculate
[224]
recurring payments like rent just like
[226]
vantage score does and we expect those
[228]
models to be used more in the future
[229]
next is the credit usage or credit
[231]
utilization category now this is the
[233]
30 rule that says to keep our debt usage
[236]
below
[237]
30 percent of our total available credit
[239]
for both fico and vantage score the
[240]
lower your utilization the better it is
[242]
for your score
[243]
the biggest difference is with the new
[245]
vantage score 4.0 model which considers
[247]
your trended utilization which is
[250]
whether you usually only make the
[251]
minimum credit card payments or if you
[253]
pay your bill in full
[254]
every month fico and the other vantage
[256]
score models do not take that into
[257]
account
[258]
and finally our recent inquiries which
[260]
is how many times you've applied for
[261]
credit recently
[263]
vantage score and fico both penalized
[265]
consumers who have multiple heart
[266]
inquiries in a short period of time
[268]
the difference is with how they
[270]
de-duplicate them deduplication
[272]
is when you apply to multiple lenders
[274]
for the same type of loan like a car
[276]
loan when you're shopping for rates
[278]
which then results in multiple inquiries
[280]
deduplication however will
[282]
actually wrap all those inquiries up
[283]
into just one inquiry that shows up on
[286]
your credit report
[286]
it's a good thing fico uses a 45-day
[289]
span to de-duplicate your credit
[291]
inquiries while advantage score is only
[293]
a 14-day window
[294]
so if you're shopping for a car or home
[297]
loan or credit card
[298]
try to do all of your applications
[299]
within 14 days to reduce the impact on
[302]
your credit score
[303]
so what do you really need to focus on
[304]
between these two models should you try
[306]
and optimize for one model or another
[308]
should you make different decisions
[310]
depending on the model that the lender
[311]
you're talking to is using
[313]
since fico 8 is so common is that the
[315]
only one that matters
[316]
the short answer is no you don't need to
[318]
worry about all the nitty gritty details
[320]
but you do need to pay attention to both
[322]
your vantage score and your fico score
[324]
for the most part those five credit
[326]
score factors are all treated very
[328]
similarly in all the different scoring
[329]
models but you should be aware of how
[331]
and when your data gets used your credit
[334]
data is used by so many different
[335]
companies for so many different reasons
[337]
and certain companies might use
[339]
one scoring model from just one company
[341]
for one decision
[342]
and they'll use a different model or a
[344]
combination of models for another
[345]
decision and you really can't predict
[347]
when that's going to happen
[349]
for example even though fico 4 is common
[351]
with mortgages the broker that i use for
[353]
my mortgage only looked at my transunion
[354]
score
[355]
so here's what you really need focus on
[358]
first and foremost
[359]
pay the bills that get reported to
[360]
credit agencies on time i mean
[362]
pay all of your bills on time if you can
[364]
but if you can't then really make sure
[366]
to pay the ones that get reported that's
[367]
gonna be your credit cards mortgages car
[369]
payments those are the big ones
[371]
if you're in a tight spot then make sure
[372]
you understand what a late payment
[374]
really is with that company
[375]
your rent for example might be
[377]
considered late if it's not paid within
[378]
three days of the due date
[380]
but it won't count as a late payment
[381]
with the credit bureaus unless it's more
[383]
than 30 days past due
[384]
but do your best to pay on time and also
[387]
don't max out your credit cards if you
[389]
have them
[389]
keep your utilization as low as possible
[392]
if you can do those two things
[394]
then you take care of at least 60 of
[396]
your credit score factors
[397]
regardless of whether it's vantage score
[399]
or fico and regardless of which version
[401]
of the model that they're using
[403]
the next thing that you want to do is
[404]
remember that your data will likely be
[406]
shared between the different agencies
[408]
anyways
[409]
when you hear someone say it's only your
[410]
fico score that matters
[412]
that's just not true because fico
[414]
gathers data from transunion equifax and
[416]
experian they're just using it
[417]
differently
[418]
and even though their models are used in
[420]
a lot of situations you never know which
[422]
model will be used with
[423]
your specific situation so assume the
[426]
data that you see on one credit score
[427]
report is being taken into consideration
[430]
by the other agencies and banks that you
[431]
may be talking to if you remember to pay
[433]
your bills on time
[434]
don't max out your cards and just assume
[436]
that all the data on your credit report
[438]
will be taken into consideration
[440]
especially as data from alternative data
[442]
sources become more widely used
[444]
then those are the most important things
[445]
that you need to focus on so until next
[447]
time this is cody with rent reporters
[449]
and i will see you
[450]
in our next video
Most Recent Videos:
You can go back to the homepage right here: Homepage