As you navigate the sometimes overwhelming world of credit and credit scores, it's essential to familiarize yourself with FICO Score 9, the latest credit scoring model developed by the Fair Isaac Corporation.

Your FICO Score acts as a strong indicator of your creditworthiness, dictating the ease with which you can borrow money, get approved for credit cards, or secure loans. Below, we’ll discuss the ins and outs of the FICO Score 9 and how it stacks up against other credit scores.

What is a credit score?

So, what exactly is a credit score? Simply put, a credit score is a numerical expression lenders use to evaluate the likelihood you will repay your debts. This score is based on a variety of factors, including your credit history, the types of credit accounts you hold, and your record of making timely payments.

FICO scores range from 300 to 850, with higher scores indicating lower credit risk. As a result, a high FICO score can open the door to better interest rates, more favorable lending decisions, and a wider range of financial opportunities. Vital credit health rewards can help you on this path, rewarding credit score gains with cash.

Your credit score isn't static — it evolves according to your financial behavior. Late payments, for instance, can have a negative impact. On the flip side, making payments on time can boost your score.

Importantly, not all credit is created equal in the eyes of FICO. The company's scoring model weighs different credit types separately, meaning your credit card activity may impact your score differently than, say, your payment activity on an auto loan or student loan.

Credit bureaus such as Experian, Equifax, and TransUnion compile the data that form the basis of your credit score. They collect information from various sources, including lenders, credit card issuers, and other financial institutions, to create your credit report — a detailed record of your credit history.

The latest version of the FICO scoring model, FICO Score 9, is designed to provide a more nuanced evaluation of credit risk. This advanced model accounts for modern lending trends and changes in consumer behavior, making it a highly relevant tool for lenders and borrowers alike.

What is FICO Score 9?

FICO Score 9, the latest FICO Score iteration from the Fair Isaac Corporation, brings substantial changes to the credit scoring landscape. Let's dive into some major elements:

Medical debt

FICO Score 9’s scoring model is more forgiving of medical debt compared with that of FICO Score 8.

Whereas previous scoring models did not distinguish between medical collections and other types of collection accounts, FICO Score 9 treats medical collections differently. This scoring model recognizes that medical bills are often the result of insurance delays or disputes and are less indicative of credit risk.

Once you've paid off any collection accounts, they no longer negatively impact your credit score under the FICO Score 9 scoring model. This is a shift from previous scoring models, under which paid collections could still affect your score.

Rental history

For the first time, a FICO credit scoring model takes rent payments into account. This could benefit borrowers with a record of positive rent payment behavior but an otherwise-limited credit history. It’s worth noting here that FICO’s credit scoring model only accounts for rental payment history that landlords report to the credit bureaus.

Score calculations

The underlying calculations of FICO Score 9 are adjusted to better predict credit risk across different credit types, including credit cards, personal loans, and auto loans. The calculations factor in your credit utilization (how much of your available credit you're using) and your credit mix, or the variety of credit types you have.

Comparing FICO Score 9 and FICO Score 8

To truly understand the value of FICO Score 9, let's see how it stacks up against its predecessor, FICO Score 8.

Handling of collections

Unlike FICO Score 9, the FICO Score 8 model doesn’t differentiate between paid and unpaid collections or between medical collections and non-medical ones. This means that under FICO Score 8, paid-off collections still have the potential to harm your credit score.

Assessing thin files

In FICO Score 8, people with "thin" credit files (few credit accounts or a short credit history) often found it difficult to build credit. FICO Score 9's incorporation of rent payments into score calculations offers a pathway for these individuals to demonstrate their creditworthiness.

Industry-specific scores

FICO Score 8 introduced more industry-specific scores (like FICO Auto Score for auto loans and FICO Bankcard Score for credit cards) than FICO Score 9. While these industry-specific scores continue to be useful, they are not as widely adopted by lenders as the base FICO scores.

Lenders may use different versions of the FICO scoring model, so it's worth knowing about both FICO Score 8 and FICO Score 9, as well as earlier versions, when assessing your credit profile.

Experian, Equifax, and TransUnion

When it comes to credit scoring, the three major credit bureaus — Experian, Equifax, and TransUnion — play a pivotal role. They collect and maintain consumer credit information, which is used by lenders to make informed lending decisions.

Known for its comprehensive credit and fraud services, Experian provides a variety of consumer and business products. They offer credit monitoring and identity theft protection products for consumers, as well as credit reporting and marketing services for businesses.

Equifax is another credit bureau that provides consumer, business, and workforce solutions. For consumers, it offers credit and identity monitoring, along with identity theft protection services. For businesses, Equifax provides credit and demographic data, as well as analytics.

Finally, TransUnion offers a suite of financial products for both consumers and businesses. Their services range from credit reports and scores for consumers to business offerings focused on customer credit evaluations and risk management.

What is a VantageScore?

While FICO Scores are commonly used by lenders, the VantageScore is another credit scoring model that consumers should be aware of.

VantageScore was developed by the three major credit bureaus as a competitive alternative to FICO Scores. Like the FICO Score, the VantageScore considers factors like your payment history, credit utilization, and length of credit history. However, the weight given to these factors can differ between the two scoring models.

  • Latest version: The most recent version of VantageScore, VantageScore 4.0, incorporates trended data, looking at borrowers' credit behaviors over time rather than providing a snapshot of their credit situation at a single point in time.

  • Credit inquiries: Unlike the FICO Score model, VantageScore uses a 14-day span for credit inquiries for auto loans, mortgage lenders, and student loans. This reduces the potential negative impact of shopping for the best interest rates.
  • Influence of medical collections: Similar to FICO Score 9, VantageScore minimizes the impact of paid collection accounts and gives less weight to medical collections.

How do lenders use FICO Score 9?

Lenders use FICO scores to evaluate the potential risk posed by lending money to consumers. While some lenders have adopted the latest FICO Score 9, many still use earlier versions of the FICO score.

  • Credit card issuers: Credit card companies use FICO scores to decide whether to approve an application, what credit limit to set, and what interest rate to charge.
  • Auto loans and personal loans: For auto loans and personal loans, lenders use FICO scores to evaluate the likelihood of the borrower making on-time payments.
  • Mortgage lenders: While many mortgage lenders still use older versions of the FICO Score, some have started to adopt FICO Score 9. The score helps them to gauge the borrower's ability to maintain mortgage payments.

Regardless of their credit scoring model, lenders aim to assess the credit risk posed by a potential borrower. Understanding how FICO Score 9 calculates your credit score can empower you to discuss with lenders and manage your personal finances.

The bottom line

Understanding FICO Score 9 is key to achieving financial health. While it’s still not as widely used as FICO Score 8, the latest version is gaining traction and may play a key role in your financial future.

With Vital, you can improve your credit score through good spending habits and earn cash back. Plus, responsible spending and sharing can help you earn more cash rewards.

Strike a balance between enjoying your present and planning for your future. Remember, when it comes to credit, every responsible decision counts; Vital is here to help you facilitate that journey.


Medical debt | Consumer Financial Protection Bureau

What Is a Good Credit Score? | TransUnion

How to Contact the Credit Bureaus | Experian

About VantageScore | VantageScore

3 Bureau Credit Reports and Scores from Experian | Experian

Vital Card blog posts are intended for informational purposes only and should not be considered financial or any other type of advice.