How Are FICO Credit Scores Different From VantageScore?
Sometimes it seems like the credit reporting system is designed to make it difficult for people who do not have generational wealth to build their creditworthiness. Only certain types of financial obligations factor into consumers’ FICO credit scores, and these tend to be types of financial obligations only accessible to middle class and upper-class Baby Boomers and their descendants. In other words, if your Baby Boomer parents had cushy jobs and bought a house for an amount that now seems like chump change, you have a harder time than they did, but you have a much easier time than your peers whose parents did not have access to the perks of the postwar middle class. Meanwhile, you have been paying your rent, your utilities, and your buy now pay later (BNPL) payments on time, but even if you have a FICO credit score, it is probably lower than that of your peers whose parents co-signed with them for a credit card when they graduated from high school. VantageScore is another credit reporting system, newer than FICO, that endeavors to give lower-income consumers credit for meeting their financial obligations in ways that the FICO score does not. To find out more about improving your FICO and VantageScore credit scores, contact a Plantation credit repair lawyer.
How Do FICO and VantageScore Measure Your Creditworthiness?
FICO stands for Fair Isaac and Co., a private company that developed an algorithm for assessing the risk of lending money to loan applicants. The company began this practice in 1956 as an alternative to earlier lending criteria which were excessively subjective and discriminatory, and its methods were further strengthened by the Fair Credit Reporting Act of 1970. The FICO credit scoring factors are as follows:
- Your history of making payments on time (35%)
- Your debt balances, compared to your available credit (30%)
- The length of your credit history (15%)
- How many credit accounts you have (10%)
- Which credit accounts you have opened or applied for recently (10%)
VantageScore is also a private company, founded in 2006. It has not published the numerical weights of its factors, but the most important ones are the length of your credit history, your debt to credit ratio, and how many credit accounts you have. Less important are the raw numbers of your debt balance and your available credit, and your recent payment activity, although these criteria still matter.
A Credit Reporting System for the Rest of Us?
VantageScore has a reputation for being more conducive to creditworthiness for consumers who lack generational wealth. This may be true, but both credit reporting systems put you at a disadvantage if other creditors have not previously approved you to borrow money or to pay in installments.
Work With a Debt Lawyer About Raising Your Credit Score
A South Florida debt lawyer can help you build your credit history if the credit reporting bureaus have failed to reflect how reliable you have been about making payments. Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.