Difference Between FICO And VantageScore: Why It Matters
There are two different types of credit scores, FICO and VantageScore. Both do the same thing, tell potential creditors if you’re a good or bad credit risk, i.e., if they lend you money via a loan or credit card, are you likely to pay it back.
We’ll explain the difference between FICO and VantageScore, why your score varies between the two models, why it matters, and how you can improve your credit score.
VantageScore vs. FICO score
The FICO score was created by Fair, Issac & Company, now called Fair Isaac Corp., or FICO, in the 1980s. In 2006, the three major credit bureaus, Equifax, Experian, and TransUnion, formed a joint venture known as VantageScore Solutions LLC and created VantageScore.
When it comes to VantageScore versus FICO, the main difference is that VantageScore uses six criteria to create a credit score while FICO uses five; the other difference is that each weighs the criteria differently:
VantageScore
Payment history: 40%
Age of and credit mix: 21%
Utilization: 20%
Total balances: 11%
Inquires/recent credit behavior: 5%
Available credit: 3%
FICO Score
Payment history: 35%
Total balances: 30%
Age of credit history: 15%
Credit mix: 10%
Inquiries/new credit: 10%
Variations in credit scores
VantageScore isn’t the same as FICO, so your FICO score may be lower than your VantageScore, or your VantageScore may be higher than your FICO score. As you can see above, there are different criteria, and those criteria are weighted differently, so depending on what score you’re seeing, it will vary.
There are other reasons your score can vary:
Not all creditors report to all three of the major credit bureaus. Any bureau they don’t report to won’t have that information to use when creating a credit score.
When you apply for credit, the creditor pulls your credit report but probably not from all three bureaus. Only the bureau the report was pulled from will record the pull, which will show as a hard inquiry and drop your score by a few points.
Most creditors report updated account information to the credit bureaus every 30 days but not on the same schedule, so your report and score vary as information is updated.
Does one score matter more than the other? According to FICO, 90% of top lenders use FICO scores to determine a person’s creditworthiness. So the odds are pretty good that your FICO score matters more than your VantageScore. But while your score will vary depending on which score you’re seeing, it will likely fall within the same range of scores which are:
Bad/Poor: 300-629
Fair: 630-689
Good: 690-719
Excellent: 720-850
Improve your credit score
Your credit score partly determines your interest rate when you borrow money for things like a home, a vehicle, or a personal loan. The lower the interest rate, the better because interest rates are the cost of borrowing money. And the higher your credit score, the lower your interest rate!
If you need to improve or build your credit score, Upwardli is here to help! We can help you build or improve your credit score, and it can be done faster than you think. Start today, and you can see amazing results in as few as 30 days.
