Custom Credit Models vs. FICO and Vantage: What's the Difference and Why It Matters

FICO and Vantage scores are well-known, widely used, and easily accessible. Meanwhile, building a custom credit model can take significant resources. So why build your own?

Let's dive into how FICO and Vantage work, how custom models differ, and why custom models can deliver meaningful performance gains.

What Are FICO and Vantage?

FICO and Vantage scores are generic, off-the-shelf credit scores built using credit bureau data from TransUnion, Experian, and Equifax. FICO has been the industry standard for decades. Vantage is a cost-effective alternative developed by the credit bureaus themselves.

Both scores are made to predict the general likelihood of repayment across a wide array of credit products—from mortgages to credit cards. They’re especially effective at distinguishing super-prime borrowers (low risk) from the rest of the population and serve as a common language across lenders, investors, and securitization markets.

Limitations of Generic Scores

The broadness of FICO and Vantage is also a con: they lose precision in the middle and lower ranges of the credit spectrum. In super-prime populations, default rates are so low that sometimes further differentiation doesn't offer much business value. But in subprime and near-prime populations—where default rates are higher—precisely differentiating customer risk profiles is critical. Generic scores simply weren’t built for that, and the lack of precision can have big costs for your business.

What Makes a Model “Custom”?

A custom credit model is built specifically for a lender’s through-the-door population and product set. Instead of trying to generalize across every type of borrower, a custom model uses detailed, relevant data to predict outcomes like default, early repayment, or repeat borrowing for your actual customers. By focusing your model on your specific population, you gain precision where you need it. Therefore, custom models often outperform generic scores, especially in underserved credit segments.

Why Don’t More Lenders Use Custom Models?

Despite their advantages, custom models aren’t yet the norm. Why not? There are several common barriers:

• Data: Early-stage lenders may lack the historical data needed to build a high-quality model.

• Expertise: Building and maintaining models requires a skilled data science and MLOps team.

• Cost: Outsourcing model development carries additional up-front costs (though a good custom model will recoup those costs many times over).

• Ecosystem Fit: Many lenders rely on FICO because it’s embedded in covenants, securitizations, and internal policy rules.

Can You Use Both?

Yes, and many lenders do. A common hybrid strategy is to maintain simple FICO cutoffs to satisfy external requirements while using a custom model to refine decisioning below that threshold. For example, a lender may approve many customers with FICO > 760 by default, then use a custom model to safely expand approval rates among those with FICOs in the 600s or 700s.

Final Thoughts

FICO and Vantage are foundational tools, but custom models offer more nuanced decisions. Whether you need a custom model now or down the line depends on your data, your product, and your business objectives, but for most lenders, it's worth the investment.

At Ensemblex, we help lenders across the globe build high-performing credit models that unlock growth, reduce losses, and create competitive advantage. If you're wondering whether a custom model is worth it for you, let's chat.