If you are looking to purchase your first car, you are likely out hunting down an auto loan to assist you with your purchase. When filling out auto loan applications, you may often come across the credit section, which will ask for personal information regarding your social name, address, birthdate, and social security number. Lenders run your credit so they can determine if they can approve you for a loan and figure out what rates they can offer.
Typically, you would normally hear lenders talk about your FICO score. However, many lenders are now looking at something similar, yet more convenient than a FICO score called a VantageScore. Understanding the difference between the two, how they work, and how to improve them can assist you in making sure you get a great rate from an auto loan lender.
What Is the Difference Between VantageScore and FICO Score?
To begin with, you need to understand that there are three major credit bureaus, which consist of Equifax, Experian, and TransUnion. A FICO score is the score that credit bureaus provide based on various factors related to recent credit applications and inquiries, credit history, collections balances, credit age and mix, payment history, and available credit.
Your FICO score may differ depending on which credit bureau you check. The reason you will not find the same FICO score from all three lenders is because it depends on whether an account has been reported to one, two, or all three bureaus. Therefore, an account may appear through some of the bureaus, but not all, which causes your FICO score to vary.
A VantageScore, on the other hand, combines your FICO score from all three credit bureaus into a convenient score that helps lenders get a clearer picture of your credit history and contributing factors. Like your FICO score, your VantageScore is also based on payment history, credit age and mix, balances, and more. Make sure you ask your auto lender which tactic they use to check your credit.
The New Credit Check
VantageScore has existed since 2006. It is an algorithm that was created by the three major credit bureaus to assist lenders in figuring out if you are a good candidate for a loan offer. Like your FICO score, your VantageScore also provides a number between 300 and 850. Although a standard FICO score is still often used by many lenders, you should be aware of the newer VantageScore and what it means to you.
Raising your VantageScore is easy enough if you make sure you have a decent mix of credit accounts and you work to negotiate terms to pay off collection balances. In fact, anything that you would do to improve your FICO score will also improve your VantageScore. Talk to an auto lending service today to find out what other tips they might offer to help you get access to a better loan rate aside from improving your score.Share