VantageScore vs. FICO: What’s the difference?

What is a FICO score?

Fair Isaac Corporation (FICO) is an analytics software company that uses mathematical algorithms to help lenders predict consumer behavior. FICO was first established in 1956. FICO scores were then created in 1989 to help lenders make faster and more objective decisions.

FICO has become the most widely recognized and used credit score provider, with FICO claiming that “90% of top lenders use FICO scores.” When you apply for a new credit card, mortgage, auto loan or rental property, lenders may use your FICO score to help make a decision.

FICO’s scoring model is updated every few years to reflect changes in credit behavior, and these updates have resulted in multiple versions of the FICO score. Two of the most recent versions are FICO Score 10 and FICO Score 10 T, the latter of which uses trended data over a period of 24 months to provide a more nuanced picture of an individual's credit risk.

There are also industry-specific FICO score versions that are optimized for certain credit products, like car loans or credit cards.

What is a VantageScore?

VantageScore is another well-known credit score company in the U.S. It was founded in 2006 by the three main credit bureaus: Equifax, Experian and TransUnion.

According to VantageScore, more than 2,600 financial institutions use its credit scores, including 90% of the largest banks and 43% of the largest credit unions.

VantageScore has been through a number of iterations, with the newest being VantageScore 4.0. According to VantageScore, this model is more inclusive than prior scoring models. It allows 33 million more U.S. consumers to be scored than in the past, including those with limited credit history and those who rarely use credit.

Financial institutions use VantageScore to assess creditworthiness for a variety of credit accounts, including personal loans, auto loans and credit cards.

VantageScore vs. FICO: score ranges

The most widely used versions of FICO and VantageScore — the “base” (general) FICO scores and VantageScore models 3.0 and 4.0 — provide credit scores that range from 300 to 850.

Earlier versions of VantageScore used a scale from 501 to 990. The scores were changed in version 3.0 to better align with the base FICO score range, as this was more familiar to consumers and often embedded in lender forms and applications.

Industry-specific FICO scores range from 250 to 900 and are used by some auto lenders and credit card issuers. These scores are not as widely utilized by lenders as base FICO scores.

While the most common VantageScore and FICO credit scores now share the same scoring scale, the meaning of the scores differs somewhat. For instance, VantageScore considers scores from 661 to 780 to be “good.” A “good” FICO score, however, falls within the range of 670 to 739. The rest of VantageScore and FICO’s respective credit ratings and their corresponding score ranges are listed below.

» MORE: What is a good credit score?

VantageScore vs. FICO: factors and weighting

While the exact factors and weighting used in VantageScore and FICO score models may differ somewhat, there are a number of similarities. For instance, payment history is the most important factor in both models. Similarly, both models consider factors like credit utilization, length of credit history and credit mix for calculating credit scores, though they use different terminology to refer to these factors.

VantageScore

FICO score

There are other important differences to highlight between VantageScore and FICO, including:

• Length of credit history: The two companies have different criteria for the amount of time it takes to generate a credit score. “FICO requires at least six months of active credit history to generate a score. VantageScore only requires one month of active credit history,” said Shanté Nicole, a certified credit consultant and founder of the website Financial Common Cents.
• Collections: FICO Score 8 ignores collection accounts under $100. And for FICO Score 9 and 10, third-party collections that have been paid off, including for medical bills, will no longer have a negative effect on your score. VantageScore 3.0 and 4.0 completely ignore paid collection accounts as well as all medical collections, regardless of their balance amounts or if they are paid or unpaid.
• Hard credit inquiries: If you’re shopping for a loan or other credit product, both VantageScore and FICO provide a period of time where multiple hard inquiries count as one inquiry. VantageScore 4.0 counts multiple inquiries within a 14-day period as only one inquiry. Newer versions of the FICO score provide a 45-day window for multiple mortgage, auto and student loan applications to count as one hard inquiry. Older FICO versions provide a 14-day window.

» MORE: How long does a collection stay on your credit report?

Bottom line

Despite their differences, VantageScore and FICO fulfill the same purpose. They both produce credit scores that are used by financial institutions to predict how likely you are to default on your debt.

You can’t control whether a lender uses VantageScore or FICO to assess your creditworthiness, but you can control your own credit habits. Both VantageScore and FICO give the most weight to payment history among all the factors that make up your credit scores, so paying your bills on time is essential. You should also aim to keep your credit utilization ratio low and only apply for new credit when you really need it.