What’s The Difference Between VantageScore® And FICO®?

Understanding your credit score and how it’s calculated can help you determine what you need to do to build or maintain your credit score. Lenders and credit bureaus may use one of the two most popular scoring systems: FICO^® and VantageScore^®. To help, we break down how these systems measure your creditworthiness and how different industries use this information.

What Is VantageScore^®?

VantageScore^® is a credit scoring model that looks at your credit reports to calculate your credit score. While most lenders use your FICO^® Score, VantageScore^® is usually better for getting an understanding of your score and figuring out where there’s the most room for improvement.

VantageScore® Credit Factors

The VantageScore^® model takes into account six factors. While factors aren’t broken down by percentile, relative weights are listed.

• Payment history: Your payment history includes reports on whether you’re current on your payments, any late payments and anything that has been charged-off or is in collections. It’s extremely influential in your score.
• Percentage of credit limit used: This factor takes into account both the age of your credit history and the mix of accounts between installment and revolving loans. It’s highly influential to your score.
• Credit mix and experience: Your credit mix is the percentage (or credit utilization) in your revolving accounts, like credit cards. This factor is highly influential when it comes to calculating your score.
• New accounts opened: If you open too many accounts over a short period of time, it can hurt your score because lenders are worried about you having limited resources if you have to take out new credit too often. It’s a minimally influential factor.
• Balance and available credit: This looks at your balances on outstanding debt as well as the amount of credit you use on credit cards. Paying down your debts will help your credit score. This factor isn’t as influential as the other ones.

What Is A Good VantageScore^®?

The score range for VantageScores® is 300 to 850. The best VantageScore^® is Superprime, which ranges from 781-850. A good or middle tier VantageScore^® is Prime, ranging from 661-780.

Factors That Don’t Impact Your VantageScore^®

Accounts such as utility, cable and phone bills aren’t factored into your score because they’re neither credit nor a loan. However, if they default or go into collections, the negative remark will go on your credit report. Other factors that don’t impact your VantageScore^® include any potential discriminatory factors such as race, religion, nationality, gender or anything related to your occupation.

What Is FICO^®?

The FICO^® Score was developed in 1989 by Fair, Isaac and Company. Like VantageScore^®, FICO^® exists to help lenders determine the level of risk associated with giving a consumer a loan. In most cases, lenders use FICO^® as an official barometer of creditworthiness when you apply and to determine terms of your loan.

FICO^® Credit Factors

The following factors and respective weights are what make up your FICO^® credit score:

• Payment history (35%): Payment history is based on your past payment behavior. It’s one the biggest factors that goes into your FICO^® Score and can include other remarks like collections and charge-offs.
• Amounts owed (30%): This takes a look at the percentage of the revolving credit accounts you use.
• Length of credit history (15%): Your credit history shows your past and current credit behavior and is a way for lenders to see how you’ve handled loans and debt. The longer your credit history is, the more lenders will be able to get a sense of your repayment behavior. However, it’s not weighted as highly as other factors, so people who are new to credit shouldn’t be discouraged.
• New credit (10%):  Each time you apply for or open a new credit account, it will show up on your credit report if it’s a hard inquiry. Lenders look at whether you’re applying for a lot of new accounts as an indicator of whether you’re extended financially beyond your means.
• Credit mix (10%): Having a mix of revolving and installment loans can show lenders how you handle different types of debt. However, it’s not a major factor when it comes to calculating your credit score.

Factors That Don’t Impact Your FICO® Score

Factors that don’t impact your FICO^® Score are the same as with VantageScore^®. These factors include any bills that aren’t reported to the credit bureaus, and anything that could prove discriminatory like your age and race.

Why Your FICO^® Score Is Lower Than Other Credit Scores

Your FICO^® Score is a type of credit score. However, your FICO^® Score and other credit scores can vary depending on the version of the scoring model your lender uses (for example, FICO^® 8 versus FICO^® 9), what information lenders have access to and how they weigh that information.]

One key thing to be aware of is that not every lender or creditor reports to every bureau, so you may have some loans or accounts that show up on one report and not others. The score for each bureau is only based on the information it’s able to collect, so it’s possible your score will be different between the three bureaus.

Differences Between FICO^® Scores And VantageScore^®

Differences between FICO^® Scores and VantageScore^® include minimum scoring criteria, credit score values, and the founders.

Similarities Between FICO^® Scores And VantageScore^®

Similarities between FICO^® Scores and VantageScore^® include their objectives, credit score ranges and being ECOA-compliant.

Credit Score Range

Even though VantageScore^® and FICO^® use different scoring tiers, they still fall within the same 300 to 850 range. The higher the score, the more creditworthy you appear.

Objective

VantageScore^® and FICO^® have the same purpose when it comes to measuring creditworthiness and evaluating risk: each strives to provide an objective look at a borrower. Ultimately, it helps lenders assess the creditworthiness of a borrower to determine whether to grant a loan, and what terms.

ECOA Compliance

VantageScore^® and FICO^® scoring models are both compliant with the Equal Credit Opportunity Act (ECOA). The ECOA mandates that credit scores that are used for lending in the US must be built using a proven and scientific method.

How To Check Your VantageScore^® And FICO^® Score

You can usually check your VantageScore^® and FICO^® Score through your bank or credit card issuer for free. Contact yours to see the exact steps to finding out what your scores are. You can find your VantageScore^® by downloading the Rocket Money^SM app, too. If you find that your score is less than favorable, consider checking your credit report and learn how to improve your credit score.

VantageScore® Vs. FICO® At A Glance

Although very similar, both VantageScore^® and FICO^® have different scoring ranges for their respective credit tiers.

The Bottom Line

Knowing both your VantageScore^® and FICO^® Score is important if you’re in the market for a loan, leasing an apartment, or you want a snapshot into your financial health. Although each uses different scoring models, they’re fairly similar. If you want to keep a closer eye on your credit, download the Rocket Money app for free today and start tracking your credit score.