You’ve started your credit repair journey, and you’re finally starting to your score increase. Now you feel confident enough to apply for new credit to start achieving some other goals only to get denied because your VantageScore wasn’t high enough to qualify.
You’re looking over the denial letter you received from the lender explaining why you were denied, and you see a VantageScore in the details. You’ve never heard of that before. Then you realize what no one told you about your credit score, is that you have more than one.
The most commonly used credit scoring model is the FICO score. FICO simply stands for Fair Isaac Company, and it’s the most widely used scoring system for credit. Although there is one FICO score, there are many variations of FICO scores that are used by different lenders. There’s a FICO 8, FICO 5, FICO 9, FICO Bankcard 2, just to name a few. Over time, lenders try to keep up with behavioral trends of consumers and to suit the needs of lenders, the FICO scoring model has been redeveloped several times over the years. So with all the FICO score variations, different variations place more emphasis on certain factors that others. This is why I always recommend picking up the phone and calling the lender for a reconsideration if you receive a denial via online or by letter.
There are many factors taken into account that you may or may not be aware of. When you speaking with a live representative in the credit department, many times you will find that they will manually review your credit report and investigate what caused the denial. They may or may not ask you several questions about certain tradelines on your report; explain to them what exactly what is or was going on at the time, and answer them honestly but strategically. With this information, they can put your application through for another reconsideration to get another decision which most likely results in an approval. For example, when I applied for my Barclays Apple Rewards Credit Card, I was in the market to purchase a new iPad for myself, and my mom for Christmas. Barclays offered a great 0% interest APR for 18 months on purchases made within the first 60 days. The reward points offered $25 Apple Store or Itunes gift cards when you reach 2,500 points. With my purchases, I was able to get AppleCare for both iPads and other accessories. When I applied, I received an instant approval, but I took it a step further and called Barclays to get a higher credit limit. My strategy behind this was to get a high limit to increase my overall limits and decrease my debt to utilization ratio. When I spoke with the representative, I asked if it was a possibility to get a higher credit line; they simply reviewed my report, asked me a few questions on some trade lines that were currently in dispute, and how much I wanted my limit to be. I gave them my number, and they approved it immediately. Keep in mind that my FICO score was in the low 600s when all this happened. Calling for a reconsideration is a good habit to have because it can result in great outcomes instead of settling for a computer-generated response.
Now about this so called VantageScore. The VantageScore model was introduced back in 2006, and essentially it was a credit scoring model that was created by the three credit bureaus because they felt the need to compete with FICO. The VantageScore model just looks and has some very similar data points at the FICO in terms of paying things on time and keeping your balance is low, but the biggest difference is that you only need one month of credit history to generate a VantageScore, whereas the FICO score model needs at least 6 months of activity to generate a credit score. Another benefit of the VantageScore is that it has a tendency of ignoring collection accounts, paid or unpaid, that may be under $250. The VantageScore ranges from 300 to 850 but also includes a letter grade of A through F, which is supposed to help you better understand your score. Although it may be similar to the FICO Score model, it’s not the same, and it’s not widely used in lending with major lenders. When you apply for a major credit or loans, they will most likely use your FICO Score.
Now another score to be aware of is the educational score, better known as a FAKO score. You will find these scores in programs such as Credit Karma, Credit Sesame, or any of those other credit scoring companies. This scoring model is just to give you an idea of what your credit score may look like. However, keep in mind that this is just an educational score that is based on what they think may be important or not. They will report everything on your reports, however, the emphasis on what is important will factor into the score they display which will vary greatly in your score. Before I took my credit repair journey seriously, I used Credit Karma for a little while. According to them, my score was “good” so I applied for a credit card, and got denied so quick, my head spin. This was before I knew about reconsideration, I wasn’t going to even debate this decision. When I got my denial letter in the mail, my FICO score was more than 60 points lower than what Credit Karma displayed. So the FAKO score does give you a perspective look and the general idea as to where you may stand with lenders, however majority of the times, it nowhere near accurate.
At the end of the day, you will never know what kind of scoring model that a lender uses. This is something that they normally like to keep a secret seeing that they don’t really like to tell their consumers what exact scoring model that they are using, so it’s really good to keep in mind that just because you have a high score doesn’t mean that you will automatically get approved, which is why it’s always important to speak with a representative and ask them for a reconsideration. If you want to find out what score model a lender uses, you may be able to get that information over the phone, but don’t apply for a loan for the simple fact of looking to see what scoring model they use. That isn’t the greatest idea. If you really just want to know what your FICO score, I highly recommend paying for one through MyFICO or if you just happen to be in the process of applying for a loan, then you can definitely refer to your denial letter or your approval letter just to see what your FICO score is.