Credit score and FICO score are two essential figures that help creditors determine your credit standing. However, they are different and can offer different outcomes. There are a few key reasons why your credit score may be lower than your FICO score:There are a few key reasons why your credit score may be lower than your FICO score:
The Scoring Models Are Different Credit scores and FICO scores are different scales that use different models to come up with a numerical figure. FICO scores are calculated using a model created by the Fair Isaac Corporation while credit scores use VantageScore models created by the three credit reporting agencies. The FICO model summarizes your payment history, the amounts you owe, how long you’ve had credit, new credit, and types of credit. The VantageScore models also consider those same aspects but with a different emphasis. A lower weighting in a certain category on one model could lead to a lower score compared to the other model.
The data cover different time frames. Credit scores employ information from the past two years while most FICO scores utilize information over the past six months. That is why if you had some negative marks over the past two years but have recently gotten better, that can lower your credit score while having less effect on FICO score. Likewise, if you have incurred more debt in the last six months, your FICO score may be lower than your credit score.
The Scores Come from Different Credit Bureaus A FICO score is a credit score that is issued by one of the three major credit reporting agencies namely Experian, Equifax, and TransUnion. Your credit score on the other hand comes from VantageScore and it may use information from several credit bureaus. If one bureau is reporting more negative information than others, the score from that bureau may be lower than the average VantageScore.
Your credit reports could contain mistakes This can also explain why your credit scores vary depending on the scoring models and credit bureaus if your reports contain errors or inconsistencies. For instance, there is a possibility of having wrong late payments reflected on the Experian report and thus the FICO score. However, that error is not going to show up in your Equifax FICO score or VantageScore. Make it a habit to review your credit reports for items that may be incorrect and negatively affecting your scores.
Inquiries were made for new credit that were not paid within the previous two years. Whenever you request a line of credit for instance a credit card or an automobile loan, the firm will pull your reports to view through hard inquiries. Hard inquiries lower your scores for a while, therefore it is advisable to avoid as many as possible. If several inquiries were made right before your scores were calculated, that may have reduced one score relative to another. Conclusively, it can be noted that a large volume of inquiries within a small period of time generally implies a higher credit risk.
Sometimes the credit mix you have may change and this means that there are some things that you need to know about the changes. Mortgages, credit cards, retail accounts, and installment loans such as student or automobile loans are preferred by the lenders in equal proportion. If you recently opened or closed any accounts that altered your mix of credit types, one score may have gone up or down a lot more because of how much weight is given to this factor. Having different types gives a signal that you are capable of handling different types of credits.
One Score Is Outdated If there has been a considerable amount of time since one of your scores was done, there might have been updates that were submitted to your credit file. To compare fairly, FICO and credit scores should be current, which means the two scores should be from the same time range. If you use an old picture to compare, it will not look like the other one. It is always advisable to begin with updated scores in order to make conclusions.
You have little credit history If you do not have a long credit history with only a few accounts opened recently, it might be that there is not enough information to calculate for the different models. In this case, it is possible that the scoring models may assign different results due to the availability of less historical data. Your credit scores from the various sources should gradually align as you maintain a good credit profile over the years.
The cause for such differences in scores can be attributed to the variation in the scoring models and the data used. However, large differences between points can also reflect errors or other processes that need further analysis. However, it is advised to track changes in FICO and credit scores to get a feel of one’s credit state in the long run. Continuously work towards the development of positive habits to increase your scores in the various models.
