The Difference Between VantageScore® Scores and FICO® Scores

The Difference Between VantageScore<sup>®</sup> Scores and FICO<sup>®</sup> Scores article image.

In the U.S., two companies dominate the credit scoring industry. FICO® is the industry leader, but VantageScore® has been gaining market share since the three major credit reporting agencies created it in 2006. Both companies develop credit scores that lenders and creditors can use to evaluate applicants and manage customers' accounts. However, VantageScore and the FICO® scoring models use slightly different criteria to determine your scores.

VantageScore and FICO Create Multiple Credit Scores

VantageScore and FICO® create credit scoring models—software that can analyze a credit report to generate a credit score. And the consumer risk scores that VantageScore and FICO® create have the same goal: to predict the likelihood that a person will fall at least 90 days behind on a bill within the next 24 months.

The VantageScore models and the base FICO® models are generic credit scores, meaning they're created for use by a wide range of creditors, such as private student loan companies, online lenders and card issuers. FICO® also creates industry-specific auto and bankcard scores, which are built on the same criteria as the base FICO® scores but tailored for auto lenders and card issuers.

As with other types of software, VantageScore and FICO® occasionally update their scoring models to ensure they remain predictive as consumer behavior changes, and to incorporate new technology, information and industry practices.

The first VantageScore model, version 1.0, was launched in 2006; the company released the latest version, 4.0, in 2017. The FICO® base scoring model dates back to 1989, but the latest versions are the FICO® Score 8 (launched in 2004) and FICO® Score 9 (launched in 2014). Creditors can choose which model to use and may test out different models to figure out which one is best at helping them determine risk with their particular customer base.

You might check your VantageScore and FICO® credit scores and wonder why they're different. In part, it's because the models give varying levels of importance to different parts of your credit report.

VantageScore vs. FICO Credit Scores

While VantageScore and FICO® scores try to predict the same thing, their credit scoring models aren't identical. Here are some of the main differences between the two companies and their scores:

Tri-Bureau vs. Bureau-Specific Models

VantageScore creates a single tri-bureau model that can be used with a credit report from Experian, Equifax or TransUnion.

FICO® creates bureau-specific scoring models. So, while the latest FICO® Score 9 might have one name, there are actually three slightly different FICO® Score 9 models—one for each of the major credit reporting agencies.

Minimum Scoring Requirements

For FICO® to create a credit score based on one of your credit reports, you'll need to have a credit account (or "tradeline") that's at least six months old and activity on a tradeline during the previous six months (they don't need to be the same tradelines).

You may be scoreable by VantageScore as long as your credit report has at least one account in it, even if the account is less than six months old.

Additionally, neither credit score agency will score a credit report if the report indicates the consumer is deceased.

The Score Ranges

With all these credit scoring models, a higher score indicates you're less likely to miss a payment, which is why creditors are willing to offer people with high scores the best rates and terms.

The base FICO® Scores range from 300 to 850, while FICO's industry-specific scores range from 250 to 900.

The first two versions of the VantageScore ranged from 501 to 990, but the latest VantageScore 3.0 and 4.0 use the same 300-to-850 range as base FICO® scores.

What qualifies as a good score can vary from one creditor to another. However, on the 300-to-850 scale, a score of at least 670 (for FICO®) and 700 (for VantageScore) will generally qualify as having good credit.

The Importance of Different Credit Scoring Factors

The impact of a specific action on your credit scores will depend on your overall credit profile and the scoring model. However, FICO® and VantageScore only consider the information that's in one of your credit reports when determining a score, and they generally place similar relative levels of importance on the same types of information.

The main factors that impact your score can be separated into several categories:

  • Payment history: Whether you've made on-time payments, late payments, have accounts in collections, defaulted on debts or declared bankruptcy.
  • Credit usage: Your credit utilization rate, or the amount of available credit you're currently using with your revolving credit accounts, such as credit cards. To a lesser extent, the amount you owe on installment loans is also important.
  • Length of credit history: How much experience you have managing credit accounts.
  • Types of accounts: Whether you have experience using and paying off different types of credit accounts.
  • Recent activity: Whether you've recently applied for new accounts that led to hard inquiries.

Within each category, FICO® and VantageScore may take different approaches to how they use or weight specific pieces of information. Three examples are how the scores treat revolving account balances (or credit utilization), collection accounts and hard inquiries.

Credit Utilization

Your utilization rate can be an important scoring factor, but most scores only consider your most recently reported revolving account balances and limits in this factor, which is essentially your total credit card balances divided by your credit limits on those accounts. This shows how much available credit you're using.

VantageScore 4.0 looks back and considers your trended utilization, such as whether you usually only make minimum credit card payments or pay your bill in full. FICO® Score and other VantageScore models don't.

Collection Accounts

Although unpaid collection accounts can hurt both your FICO® and VantageScore credit scores, collection accounts are treated differently depending on the type of account, whether it's been repaid and the specific scoring model.

For example, FICO® Score 9 ignores paid collection accounts and puts less importance on unpaid medical collections than other types of unpaid collections. (Paid medical collection accounts no longer appear on your credit reports and thus are not part of any credit score calculations.) FICO® Score 8 doesn't differentiate between medical and non-medical collections and doesn't ignore paid collection accounts that appear on your report. Both versions ignore collection accounts when the original account's unpaid balance was under $100. Medical collection accounts won't show up on your credit report if they're under $500 are less than 365 days past due.

VantageScore 3.0 and 4.0 both ignore paid collection accounts and ignore even unpaid medical collection accounts, regardless of their balance.

Credit Inquiries

A hard inquiry gets added to your credit report when you apply for a new credit account, and it can hurt your credit scores (though usually for less than a year). However, scoring model creators understand that applying for multiple loans so you can compare your options and offers is savvy rather than risky behavior.

VantageScore addresses this by deduplicating (or "deduping") any inquiries that occur within a 14-day window. If you apply for a credit card today, a personal loan tomorrow and five auto loans next week, you may have seven new hard inquiries on your credit report, but VantageScore scores you as if you only had one hard inquiry during that period.

Recent FICO® Scores have a 45-day dedupe window, while older models (including those that are still used for mortgage lending) have a 14-day dedupe window. However, FICO® Scores only dedupe multiple inquiries from student loan, auto loan and mortgage applications.

But FICO® also has a hard-inquiry buffer, which means any mortgage, auto or student loan hard inquiries from the previous 30 days won't impact your FICO® scores.

The Same Behavior Can Help All Your Scores

There are many differences between VantageScore and FICO® credit scores, and each companies' various credit scoring models. However, all the scoring models try to predict the same thing using the same underlying data. As a result, if you focus on building a good credit history, you can improve all your scores. One way to do that is to monitor your credit regularly. Experian's free credit monitoring service provides access to your Experian FICO® Score, credit report and other information that can help you better understand how credit scores work and actions you can take to improve all your credit scores.

How Good Is Your Credit Score?

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