Understanding different credit score models (FICO, FAKO, Vantage)


Credit scoring is a rough science at best.

So it’s not really surprising that there are a ton of different models.

You may know that the most reputable scores are FICO scores. According to their website, their scores are used by 90% of the top lenders.

Non-FICO scores are often called FAKO scores by consumers. And in most cases, they should be used only as a rough estimate—if that.

Still, there are several dozen different FICO scores for each individual.

Why is this?

Keeping Credit Scores Up to Date

FICO makes its money selling its credit scoring system.

Lenders use it to evaluate risk. Credit bureaus use it to create their products and services.

Its current form, the basic FICO score has been in play since 1989.

But in the 25+ years since it became the industry standard, it has gone through several changes. To stay current, the company has had to continually develop its system to reflect the times.

While the most commonly used in credit decision making is the FICO Score 8, there are more than 5 versions currently in use.

This may seem illogical to consumers. But there is good reason. FICO has to continue to evolve their rating system in order to reflect modern markets.

However, there is a delay in the implementation process as lenders choose when to switch to updated versions (if they choose to make the switch at all).

So what we, as consumers, are left with is a variety of scores that all paint a slightly different picture depending on what factors any particular credit rating model emphasizes.

To complicate things even further, we have 3 major credit bureaus that serve up FICO’s information on their own terms.

Credit Bureau Reporting

Experian, Equifax, and TransUnion are our nation’s 3 major credit bureaus.

They are responsible for compiling credit information from your former and current creditors, past employers, landlords, and other financial factors. They use this info to create credit scores for consumers, lenders, employers, and anyone else that needs it.

The most popular scores are based on one of FICO’s proprietary rating scales.

When people talk about your main three scores they are referring to your standard FICO 8 score as assessed by the 3 major bureaus. It very common that all three of these scores will be different for any individual. That’s because all 3 bureaus record and process credit information a slightly differently.

The obvious effect is this triples the number of credit scores individuals need to consider.

There is no guarantee that all three bureaus have detected exactly the same information. And sometimes, one of the 3 scores may be significantly lower than the others.

That’s why it’s so important to take a look at as many of your scores as possible and pay more attention to the range your scores fall into than individual point values.

Credit Type Specific

Aside from the basic scores, there are also industry-specific scores.

FICO offers Auto Scores and Bankcard Scores that auto and credit card companies may choose to use if they want. They range from 250-900 instead of 300-850.

And of course, all three credit bureaus offer their own versions.

In addition, several of the older editions of the base FICO score are used for mortgage-specific inquiries.

Remember, it is always the lender’s choice what aspects of your full credit report they want to take into account. So while all three bureaus market credit scores that are specialized to different types of credit, there is no real way to know what any given lender might choose to emphasize.

In the end, these industry specific scores can be very helpful.

But like every other score, it’s only an estimate of where you stand.

The lenders are the only ones who control which scores they do or don’t use.

VantageScore and “FAKO” scores

FICO is definitely the big fish in the credit scoring pond.

But they aren’t the only fish.

There are other scores you can use to try and get an idea of how lenders might view your full credit report.

None are all that widely used at this point in time, but they aren’t all worthless.

VantageScore credit scores are a collaboration between the three major credit bureaus—Experian, TransUnion, and Equifax—which is basically an attempt to break through the FICO credit scoring monopoly.

It’s latest form, VantageScore 3.0, uses the same 300-850 score range as the FICO score.

Despite this, it hasn’t picked up much traction yet, though it may.

It’s still mostly lumped in with other alternative scores that you can get for free online. Consumers often refer to these are FAKO scores because their accuracy is often questionable at best.

VantageScore may be an exception, but that’s not necessarily the perception.

My Best Advice

Always pay close attention to your credit report.

All credit scores are simply an interpretation of your full credit report. Sure, taking a look at many of your scores will provide you with a lot of perspective about how different creditors may view you.

But do not think you need to look at all of your scores to get a good idea of where you are at. You’ll be fine getting a free credit report from a reputable source.

Do not obsess over your different scores, simply use them as a reference for what range you fall into.

The most important thing is to do what it takes to improve your credit consistently. Focus here, and all your scores will rise as one.