Credit Scoring Models- FICO (Fair Isaac) to Vantage

Credit scoring started in the late 1950’s to support lending decisions in large department stores.  The concept was revolutionary and by the end of the 1970’s most of the nation’s largest commercial banks, finance companies, and credit card issuers used credit scoring.  It became widely accepted once Fannie Mae and Freddie Mac fully endorsed the use of the FICO score for home mortgage lending.

The FICO score was actually first created in 1956 by William Fair and Earl Isaac when they created their company Fair Isaac Corporation (FICO).  Their system used a mathematical model and a computer to help depict consumer lending risk.  To be more specific, the FICO score represents a consumer’s risk of going 90 days late on an account within the next 3 years.

Until 2001 consumers were not even allowed access to their credit scores. This changed when California adopted a law stating consumers were entitled to know everything about what is on their credit reports.

At the same time FICO started developing customized scoring models for each individual credit bureau.  Today each bureau still has their own specific FICO designed score.  Equifax commonly names their score model BEACON.  Experian many calls their model Experian / Fair Isaac Risk Model.  And Trans Union has named theirs Empirica.

Even though the bureaus have their own FICO models, in 2006 they decided they wanted a bigger piece of the pie and announced their intent to design their own credit scoring model.  Today that model is known as Vantage Score and is offered on the credit monitoring sites owned by the credit bureaus.  The intent of the bureaus is to have Vantage Score widely accepted by lenders to eventually replace the FICO score.

Vantage score is VERY different from FICO.  For one, FICO’s credit score scale ranges from 350-850 while Vantage ranges from 500-990.  This is a BIG difference in scores, and can be very confusing to consumers and lenders.  A 700 credit score with FICO is “A” credit, but with Vantage a 700 score would be classified as “D” or poor credit.

It is very important for all consumers to know which credit scoring model they are looking at due to the many big differences between them.  Not much is known about the Vantage Credit Scoring model at this time, as it is not widely being used, however is something that could become more frequently used in the lending industries.

We thank Sal Bonanno for the above article.  Sal works for First Premier Credit Repair.  Sal can be reached at 855-278-3578.

On a closing note:  currently, the Home Lending Industry is using the Fair Isaac scoring models with a tri-merge, (obtaining a credit score from the 3 agencies Experian, Equifax and Transunion) credit report being ran on each borrower.  We are required to use the middle score of the lowest borrowers credit.  The credit score is the first step to securing a home loan, as it opens the doors to the loan programs that are available.  Once the door is opened, then the remaining analysis of the file must take place.



Karen Jones is a Licensed Mortgage Loan Officer (NMLS 307015) located in Phoenix and serving Arizona and California consumers with their home lending needs. As a Banker of over 39 years, Karen is dedicated in ensuring that her clients are well-educated and prepared for their new home purchase.  Learn more about our 100% Financing programs and obtain your Buyer Credit Approval before you start shopping. Let a home loan specialist guide you by contacting Home Loan Officer, Karen Jones from AmeriFirst Financial, Inc. located in Phoenix, Arizona.


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