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Popular Credit Scores and Their Models

The credit score may be a simple three digit number, but it can differ greatly depending on which model your business chooses to use. Consumers’ credit scores are calculated based on aggregated personal spending and lending data, including payment history, length and utilization of credit, and the number of new credit accounts they’ve opened. Scores generally range from 300 (very low) to 850 (excellent), but you may pull several scores for the same person depending on which score model you use.

Credit score models vary from industry to industry. While most people will recognize the FICO (Fair Isaac Company) credit score, there are several credit score models, resulting in varying scores for the same person’s data. Even within the FICO credit score model, new versions are released all the time. A consumer’s score depends on which model your company uses. For example, while one model may put heavier emphasis on how often they fail to make their payments on time, another may focus more on the amount of available credit they have. Choosing the criteria that is most important for your company to determine the value of your consumers will help you choose which model is appropriate.

Not unlike a secret recipe, the exact breakdowns of the most popular credit score models are often unknown. Afterall, if the algorithm were available to everyone, anyone could recreate their business model. 

FICO 9 Model

The most widely used credit score model, FICO has been a staple for the three credit bureaus since the late 1980s. The model varies slightly from version to version, with the newest model (FICO 9) being released in 2014. The major revision for this model reduced emphasis on unpaid medical bills. However, many industries still use earlier versions of FICO, including 2, 4, and 5.

Industries: FICO 8’s auto industry-specific score is popular in the auto industry due to its focus on payment history. However, the VantageScore Model (see below) places even more emphasis on this aspect of consumers and remains popular as well. Because the model is relatively new, experts expect it may be years before FICO 9 overtakes the older FICO 8 model and industries are able to adjust across the board. FICO models 2, 4, and 5 are popular among mortgage industry businesses.

FICO 8 Model

Because the FICO 8 model is seemingly here to stay (for now), going over its differences from FICO 9 will be important. The general breakdown, as far as experts can tell, is the same as the FICO 9 model, with some key characteristics. The FICO 8 model is forgiving of isolated late payments. If your business is concerned about consumers who were late paying on their auto loan once in the last three years, it’s probably not the best model for your business. However, there is much higher emphasis on multiple late payments. FICO 8 also ignores collection accounts under $100. Smaller businesses: proceed with caution.

For a full comparison of FICO 8 and FICO 9, visit here.

VantageScore Model

In 2006, the major credit bureaus decided to challenge the routinely accepted FICO credit score by introducing the VantageScore model. While there are similarities between the two, VantageScore places varying weight on aspects of your credit score.

This score model places the most weight on payment history (whether you’ve made payments on time in the past or have been sent to collections for amounts over $250 for non-payment) and how old and what type of accounts consumers have. A user’s available credit is the least concern for this scoring model.

Industries: VantageScore is most often used in the Auto Loan and Personal Credit Card industries.

The world of credit scores is confusing and knowing which model works best for your business can be difficult. But being aware of the many different models and how they are used in the industry you’re interested in can help you navigate the rough terrain. For more information on how our credit report services and how Soft Pull Solutions can help, visit our credit report services page.


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