FICO vs. FAKO vs. VantageScore

FICO vs. FAKO vs. VantageScore – Things can get confusing when you try to learn about your credit rating. You might get a free credit monitoring service and be happy to receive a free score. However, the number you get is not necessarily accurate — and sometimes it is off by 100 points or more.

To put it simply, your FICO score is the most accurate estimate of your credit rating. Your FAKO score is a non-FICO score. It is not as accurate, but it still gives you a good idea of your score. Your VantageScore is similar, except it stands a better chance of getting used by a prospective borrower.

Fico-Fako-VantageScore

Understanding FICO Scores

There are more than 50 FICO score versions that exist. The most common ones are the FICO Auto Score, Bankcard Score and FICO Score. The particular model which gets calculated is dependent on the type of loan you require. For instance, a mortgage would use a basic FICO Score version while a credit card could get applied for with your Bankcard Score.

The way your FICO score gets calculated is dependent on the version. Typically it will range from 300-850 points. The calculation breakdown is as follows:

  • 35 percent for payment history
  • 30 percent for credit utilization
  • 15 percent for average credit age
  • 10 percent for new accounts
  • 10 percent for credit diversity

Your FICO score will get calculated individually with each of the major credit bureaus. A borrow can have different information with each of their reports. A lender will also choose one of the bureau files to pull. Therefore, your qualification requirements and score can vary depending on the information you have with each file.

The vast majority of lenders determine your eligibility by looking at one of your FICO score calculations. This is the figure you should use when attempting to improve your credit, as well.

Why Your FICO Score is So Important

Nine out of 10 lenders in America are using a FICO scoring model to determine financing eligibility. The most common model is your basic FICO score, which uses the calculation algorithm listed above. However, the way your score calculates can slightly differ depending on the purpose of the financing.

Your Auto Score

This credit rating algorithm is all about making sure you can afford a new vehicle. It looks at your overall monthly affordability based on your current debt obligations. An auto lender will be able to overlook certain things that a credit card issuer might not put past them.

Your Bankcard Score

This particular credit rating model looks more at your credit card debt than anything else. It puts a greater amount of weight into your credit card repayment history than your installment loan repayment activity. This makes it a more effective scoring model for credit card issuers trying to vet you.



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Understanding Your FAKO Score

FAKO scores consist of any credit ratings that are not made up by FICO. The majority of these exist for credit score tracking purposes. You can look at the calculation from month-to-month and get an idea of how your score is progressing. Any positive or negative action will impact as such, but your rating won’t always line up with your FICO score.

There are very few lenders that qualify you based on your FAKO score. It can be a method for pre-approving prospective borrowers. However, the majority are going to request one of your FICO scores from a major bureau. So, you should not put too much weight into your FAKO score.

Some of the more popular credit-based services/websites to offer a FAKO score include:

  • Credit Karma
  • Credit Sesame
  • Quizzle

Each of these companies offer both free and premium credit monitoring services. They serve as an indicator of your credit-building progress. However, it is not enough to go on when determining whether you qualify for a major loan. You should always stick with your FICO score calculations when buying a car or home. Not to mention, the scoring zone (in points) differs and does not always follow FICO’s path.

The Problem With FAKO Scores

There are many different FAKO scores out there and there is not a universal way to calculate yours. In fact, a FAKO score could vary by hundreds of points depending on the algorithm that the calculating company uses. Any sudden changes to your credit report can have a major impact, as well.

Any prospective lender will not generally use your FAKO score. However, a bureau-based score might come into play when trying to pre-approve you for new credit. This means a FAKO score could be an initial screener and sometimes it can be used to bypass a hard inquiry. With a soft pull and a score estimate, some lenders have enough to go on to make their decision.

Here are some other issues with using FAKO scores:

  • No lenders actually use it when screening new applicants
  • The score you see could be very different elsewhere
  • Any single missing entry can severely skew your score
  • Missing a negative item could severely disfigure your perception

Basically, following your FAKO score can send you down a troubling road. It just takes one negative instance to send your FICO score dropping. However, this might or might not happen with your FAKO score calculation. You could be lead to believe your credit is still running strong — when that is not actually the case.

Credit Score

Which Credit Score Are You Getting?

The services above are all very popular and more than one-third of Americans have an account with at least one site. So it is a good idea to know the difference in credit-scoring between each of them.

  • Credit Karma offers your Equifax and TransUnion scores
  • Credit Sesame includes your Experian National Equivalency score
  • Quizzle provides you with your Vantage Score rating

You should research and choose a credit monitoring service with care. The difference in the effectiveness of your credit score estimates will follow.

Typically, your VantageScore rating will be a more accurate guess of your FICO score. But you have to take into consideration the unique information found on your file at each of the credit bureaus. Any missing positive items will hold your credit rating down on a particular report.

Understanding Your VantageScore Rating

Once upon a time, your VantageScore would make up for approximately 10 percent of your loan qualifications. It is now not so dominant, but there are still quite a few lenders that consider this score.

Your VantageScore 3.0 rating will fall in the 300-850 point range. The main calculation factors are as follows: your payment history, credit age, type, utilization, available credit, total balances and debts, and recent credit behavior.

The main difference with your Vantage Score is that you put more weight in your average credit age. This is less of a factor than your utilization rate with your FICO score, but that is not the case with your VantageScore calculation.

Here is why your VantageScore rating still matters:

  • Nearly 10 percent of lenders use it
  • Works well for ongoing credit risk analysis
  • Provides a fair calculation even without 2 years of payment history
  • Any score changes are systematically calculated with each new entry

Furthermore, there are approximately 30 million more Americans with calculable credit scores using this model over any other. This means that even thin file borrowers and people in credit despair can benefit from following their VantageScore rating.

Conclusion

There are three different sets of credit scores that exist — FICO, FAKO and VantageScore. Each are useful in their own right, but only your FICO scores will truly matter in the end. You should not get caught up in tracking the others as anything more than a general indication of your progress from month-to-month.

It is understandable that you cannot pull your report and get a proper calculation every single month. Instead, all you can do is track your report changes monthly and estimate the score impact.

Sources:

http://myfico.custhelp.com/app/answers/detail/a_id/469/~/fico%C2%AE-score-versions-included-in-your-credit-report

http://www.doctorofcredit.com/credit-scores/fako-score/

https://www.vantagescore.com/images/resources/VantageScore3-0_WhitePaper.pdf

https://www.quizzle.com/resource-center/credit-q-and-a/how-is-my-vantagescore-credit-score-calculated

http://www.myfico.com/crediteducation/how-lenders-use-fico-scores.aspx

https://blog.smartcredit.com/2010/05/01/what-is-an-auto-credit-score/