If you’re looking to open any line of credit, from a small personal loan to securing a mortgage, you’ll need a satisfactory credit score. But not all scoring systems are created equal, so if you’re monitoring your credit, it’s a good idea to know the difference between the two main players.
What is a Credit Score?
Put simply, a credit core is your financial report card. It’s usually a number between 300-850 that demonstrates an individual’s creditworthiness and used by lenders to predict how likely it is that a person will repay a loan. This is a standard risk aversion tactic for anyone lending money or loaning assets.
What is a FICO Credit Score?
FICO is one specific means of calculating a credit score developed by the Fair Isaac Corporation. Most lenders use FICO as their go-to method of checking out potential clients’ financial history.
What is Vantage Credit Score?
Vantage is another method of checking out your financial health. The credit scores you find online are called Vantage Scores. Though they are considered to be a good way for individuals to evaluate their likelihood of being approved, they are generally not the deciding factor for the lender.
What’s the Difference?
Vantage scores are much easier for borrowers to monitor as they can be easily calculated online. However your FICO score holds much more importance to most lenders, as this will inform the basis of their decision to lend to you or not.
Though FICO and Vantage scores may be calculated with slightly different methods and weightings, the information they require about an individual is very similar.
How Can I Ensure the Best Credit Score?
When monitoring their credit, it’s important for borrowers not to fixate too much on the number itself but more on whether or not your score is heading in the right direction.
Pay all your bills on time, use credit moderately, and pay your balance each month. Also, it’s a bad idea to steer clear of all types of credit or lending as you will still need a financial history to give evidence that you can handle credit responsibly.
Learn More:
Improving and Maintaining Your Credit Score for a Michigan Home Loan
Why Credit Scores May Vary Between Different Reporting Companies
About Michigan Mortgage Lender, Julie Krumholz
Julie Krumholz is has been helping Michigan homebuyers for over 30 years and has several loan programs available to help people with lower credit scores or those that need down payment assistance.
She can also suggest ways to increase your credit score several points before even applying for a loan. Sometimes it just takes a few changes to increase it by 25 to 50 points. Julie is here to help you navigate through the entire process.
Call Julie from Superior National Bank today at: 586-382-5482.
