The 2 U.S. Credit Scoring Models

In North America there are generally two different credit scoring models used by most banks, Vantage Score and FICO Score.

Vantage is a joint project between three of the leading credit bureaus, Experian, TransUnion, and Equifax.

It was created in an effort to make a more accurate credit scoring model that could assign a score to consumers with as little as 1 month of credit history compared to the 3 months needed for most older models.

The FICO score is a creation of the Fair Isaac Corporation, another leading credit scoring bureau.

Credit Scoring Models Compared


Credit Scoring Models Compared

Vantage Score 3.0 FICO Score
Creator: Experian, TransUnion, Equifax Creator: Fair Isaac Corp.
Factors & Weighting: Factors & Weighting:
Payment History: Most Important  40% Payment History: 35%
Age of Credit: Very Important    20% Amount Owed: 30%
Credit Utilization: Very Important   20% Age of Credit: 15%
Total Balance: Moderately Important  10% New Credit: 10%
Recent Behavior: Less Important     5% Types of Credit: 10%
Available Credit: Least influential   5%

Why do we have scoring models?

Credit scoring models are designed to help banks determine how likely you are to pay back the money you borrow.

To the banks, if you are 90+ days past due on a payment you have effectively defaulted.

How do the models work?

Scoring models look at each scoring factor and give you a certain number of points depending on your behaviour.

All of your points are then added up and you are grouped into a corresponding 20-point band with others who have the same probability of defaulting as you do.

For example, a score of 581-600 corresponds to a 19.4% probability of default over 2 years.

Important differences between new and old models

  • Older models do not count collections (unpaid bills) that are eventually paid.
  • Collections still show up for 7 years on your report but do not factor into your score.
  • If you pay off a past due debt it will have an immediate positive impact on your score.
  • Unpaid medical bills count less than unpaid normal expenses and do not count as unpaid until they are 180 days overdue
  • These models include your property rental history (if you pay your rent on time) into the score.
IMPORTANT! These models are new so it will likely take a few years before lenders fully convert to these new models. In the meantime, you should consider bills that are 120 days past due to be bad for your credit regardless of if they are paid off or not.


How do you stack up against the U.S. Population?

During economic expansions, credit quality generally improves.

As of April 2018, 55% of the population has a score of 700 or higher.

A score of 700 or higher will qualify you for the best lending rates on a car, home, or credit card.

FICO Score Distribution

FICO Score Distribution

Source: FICO Blog

How Do I Use This Information?

Now that you understand the high-level factors that go into determining your credit score, head over to our detailed credit score guide for the day-to-day decisions you can make to improve your score.

The Best Credit Score Guide on the Internet

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