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If you recently applied for a new credit card or other type of personal loan from a major bank or credit union, chances are the lender looked at your FICO® Score and may even have shared it with you when you applied.
Most leading credit card issuers also offer free credit information to customers. Some, like Discover, are even more generous, offering free points to anyone willing to provide their information. While Discover offers free FICO scores to the general public, some educational sites and card issuers offer VantageScore information.
But what is the difference between the versions? Here’s a closer look at the most widely used consumer credit scores, how lenders use them, and what makes them different.
What are the similarities between FICO Score and VantageScore?
Both FICO Score and VantageScore share some key similarities, described below:
Factors Affecting Your Score Calculation
FICO Score and VantageScore take into account the same information to determine a credit score, and each tends to give the same weight to the following information:
- payment history
- Credit use
- Length of credit history
- Account types
- Recent Activity
Score ranges
Regardless of which credit scoring model we’re talking about, the higher the better. The higher your score, the more creditworthy a lender will consider you to be. Both the base FICO score and the latest VantageScore 4.0 model range from 300 to 850.
What scores predict
Both credit scoring models aim to predict the same thing – a person’s credit risk. Your credit habits usually affect both credit scoring models equally. Making payments on time, keeping credit usage low, and generally taking steps to improve your credit score should keep your score healthy no matter what model the lender uses.
What is the difference between FICO Score and VantageScore?
Now let’s focus on the differences between these two scoring models:
Minimum points requirements
Both FICO Score and VantageScore have different minimum score requirements. To qualify for a FICO score, you must have opened a credit account for at least six months and have been active in a credit account (this may be the same or a different account) for the past six months. However, if you have at least one account listed on your credit report, you may qualify for a VantageScore even if that account has been open for less than six months.
Credit Score Versions Matter
Newer versions of your credit score may also differ from older versions of the same score due to changes in the way companies calculate them. For example, a newer version of your credit score might account for a recent late payment with more weight than an older version.
As a result, the parts of your credit history that most influence the success of your application will depend not only on the type of credit score the lender uses, but may also depend on the version of that score.
For example, FICO Score 9, released in 2014, is different from any other previous version of the FICO Score because it doesn’t take into account bills you’ve paid and places less weight on medical bills. In addition, unlike older versions of the FICO Score, it also takes into account rental payments.
FICO Score 10, released in 2020, is the first FICO scoring model to include trending data, and UltraFICO Score is the first model to take into account your bank transactions and the constant amount of cash you usually have.
Still in circulation, VantageScore 3.0 places more value on your overall payment history than any other component of your score. But the new VantageScore 4.0 model expands on previous versions by placing significantly more weight on total credit usage and debt-to-loan ratio than your payment history, and puts less emphasis on medical fees and ignores newer collection accounts that are younger. than six months.
Lenders use different credit scoring models.
The credit scoring model your potential lender uses will vary, with some using FICO Score and some choosing VantageScore.
However, there is a good chance that your lender is using some version of the FICO score, as 90% of lenders use it, according to the FICO website. It has been trusted by lenders for decades – it is an independent data analytics company, which means it is not a credit bureau and is not controlled or owned by the top three credit bureaus (Equifax, Experian and TransUnion).
bottom line
There is no such thing as a universal score. The truth is that you have many different credit scores, including those from the same developer.
But despite the differences between scoring models, the core components of maintaining a good credit score remain the same: pay your bills on time, limit your credit usage, don’t close your oldest revolving account, and don’t go crazy applying for a full loan. a lot of credits at once.
Follow these basic rules of thumb and you can create a credit score that you can proudly show off to any lender.
Editorial disclaimer
The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.
