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FICO v. FAKO Scores

By LaToya Irby, About.com Guide

The FICO score was created in the mid-1980s by the company formerly known as Fair Isaac (now called FICO). The FICO score was intended to help lenders figure out which borrowers were most likely to default.  In March 2006, the three major credit bureaus - Equifax, Experian, and Transunion - launched the VantageScore or PLUS score.

This was a new credit score designed to provide consistency with the credit scores provided by any of the three credit bureaus.

While both the FICO and the VantageScore/PLUS scores were created to help lenders avoid risky, and therefore costly, borrowers, there are some key differences in the two credit scoring models.

Credit Score Range

The FICO score ranges from 300 to 850, while the VantageScore/PLUS scores ranges from 501 to 990. Both credit scores consider borrowers with higher credit scores to be less risky than borrowers with low credit scores.

The VantageScore assigns a letter grade to its credit score depending on where it falls within the range:

· 901 – 990 = A, Super Prime
· 801 – 900 = B, Prime Plus
· 701 – 800 = C, Prime
· 601 – 700 = D, Non-Prime
· 501 – 600 = F, High Risk


Credit Score Calculation

The FICO score bases its credit-scoring formula on five categories of information, while the VantageScore uses six.


FICO Score
· 35% payment history
· 30% level of debt
· 15% age of credit history
· 10% types of credit
· 10% credit inquiries


· 32% payment history
· 23% utilization
· 15% balances
· 13% depth of credit
· 10% recent credit
· 7% available credit


Both the FICO and VantageScore credit scoring formulas give about the same amount of percentages for payment history and new credit inquiries. But, there's a big difference in the treatment of utilization, age of credit history, and types of credit.

FICO gives utilization 30% of its credit score, while the VantageScore places a heavy 45% on how much credit you're using.

FICO gives a total 25% to age of credit history and types of credit. The VantageScore gives these two factors 13%.


Which is Better?

FICO.  Often times the FAKO scores online are inflated compared to the real FICO scores. Since ALL lenders use the FICO scores and none of them use FAKO scores, you may be better off checking your score through the bank, mortgage company or credit union or www.myfico.com instead of spending your hard-earned money on unreliable scores.  EVEN if you go straight to the credit bureau websites themselves, they will sell you FAKO scores and not FICO scores.



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