Most credit bureaus produce two important types of credit score models: FICO Score and Vantage Score. The model of scores will depict individuals' financial stability and ability to repay credit.
Now let's look into FICO and VantageScore models in detail.
FICO Score Model
In the first place, Fair Isaac Corporation developed the FICO score model in 1989. A population of 90% of lenders utilizes the FICO score, before offering credit as a deciding factor. On basis of these scoring models, the FICO score is 3 digit number that ranges from 300 to 850. Availing or containing 750 and above is a good credit rating. It helps in getting personal loans at the lowest rates.
Credit Score Table As Per FICO Score Model
Score Range | Credit Ratings |
800 to 850 | Exceptional |
740 to 799 | Very Good |
670 to 739 | Good |
580 to 669 | Fair |
300 to 579 | Poor |
How Is Credit Score Calculated By FICO Score Model?
Percentage | Credit Factors |
35% | Payment History |
30% | Amount Owed |
15% | Length Of Credit History |
10% | Credit MIx |
10% | New Credit |
VantageScore Model
This model is built and developed, in collaboration with three main credit bureaus, that is Equifax, Experian, and Trans Union. The VantageScore model is curated as an alternative to FICO Score model. The updated or the latest version of this model 3.0 and 4.0 contains the same range of scores as the FICO score 300 to 850. Although, VantageScore and FICO scores both give importance to payment of history; however, VantageScore emphasizes more on factors like credit utilisation ratio, credit balance and many such factors from the history.
Credit Score Table As Per To VantageScore Model
Score Range | Credit Ratings |
781 to 850 | Excellent |
661 to 780 | Good |
601 to 660 | Fair |
500 to 600 | Poor |
300 to 499 | Very Poor |
Calculation By VantageScore Model Of Credit Score
Influence | Credit Factors |
Extremely Influential | Total credit usage, available credit and balance |
Highly Influential | Credit mix and experience |
Moderately Influential | Payment history |
Less Influential | Age of credit history |
Less Influential | New accounts |
Now you know about the types of credit, thus read furthermore to know key facts that affect credit scores.
Factors That Affect Credit Score
Payment History:
This aspect is one of the most important part, it determines credit scores and accounts( 35% of FICO scores). Also, lenders always make sure to check the past credit history, to assess all the information about the individual to determine their credit behaviour, ability to repay without defaults and credit worthiness.
Credit Utilisation Ratio:
The credit utilisation ratio shows, how musch an individual has utilised their credit, beyond the limit of their account. Also note that anyone using credit cards beyond their limit will have to face decline in credit scores. Thus maintain credit utilisation ratio and utilise credit ratio up to 30% of your income.
Therefore these are some of the main affects one has to be careful about.
The Bottom Line:
A credit score decides individuals approval or rejection. Thus, be careful to take credit scores out according to their requirement. For example take credit scores from Buddy Score, they provide Experian scores, also its best if an individual is willing to take personal loans. Buddy Loan avils Buddy Score as a added feature in their website and mobile application. Thus avail credit scores from here to check the credit worthiness before applying for personal loans.