Confused about the difference between FICO and VantageScore? Here's exactly how they work

Not sure what the difference is or how they work? Here’s a breakdown of FICO vs. VantageScore and how they impact your finances.

FICO vs. VantageScore 

FICO and VantageScore are two widely used credit scoring models that help lenders determine your risk as a borrower. They’re also often used by landlords, utility companies, and even employers to evaluate your history with borrowing money and paying bills. Both scoring models range between 300 and 850 and evaluate factors such as your payment history, amount of credit used, length of credit history, and more.

However, that’s where the similarities end. FICO and VantageScore calculate your scores differently, and are used in different situations. Here’s an overview of some of the main ways these two scoring models differ. 

Understanding how both your FICO and VantageScore credit scores work is important, because they’re both widely used in lending decisions and other important financial situations. “What one lender considers as a ‘good’ credit score, another lender might consider as just ‘fair,’ depending on the credit-scoring model used,” says Carlos Medina, senior vice president and head of sales, strategic partnerships, operations and business development at One Technologies, the developers of ScoreSense. So read on for a more in-depth overview of each.

What is FICO?

A FICO score is one brand of credit score. It stands for the Fair Isaac Corporation, which was one of the first companies to develop a credit scoring algorithm based on information contained in consumer credit reports. The FICO credit score was introduced in 1989 in an effort to “democratize fair access to credit by helping to replace human judgment with a data-driven credit assessment and took prejudice out of the equation as the analytic tool does not consider race, age, gender, or marital status.”

Today, there are many companies that provide credit scores, all based on their own scoring models. However, FICO is still the most common score used by lenders and creditors when evaluating borrowers. In fact, FICO estimates that its scores are used by 90% of top U.S. lenders when making lending decisions.

How FICO scores are calculated

FICO notes that there are some key differentiators between its score and other models. The most important distinction is that FICO requires a minimum scoring criteria in order to provide an accurate number. This means that in order to receive a valid FICO score, your credit report must reflect: 

• At least one account opened for at least six months or more, and 
• At least one account reported to the credit bureau in within the past six months, and
• No indication that the individual is deceased

FICO Scores are calculated using a variety of data points from your credit reports. However, this data can be categorized into five main factors that impact your score: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%)

You might also be surprised to learn that you actually have several FICO scores, all of which are a bit different. Quite a bit has changed since the first FICO score was introduced, and its scoring model has been updated over the years to account for changes such as lender requirements, data reporting practices, consumer behavior, and more.

Medina says the most widely used version today is FICO Score 8, though FICO Score 9 is also used often. He adds that there are also industry-specific FICO scores based on the type of credit you’re attempting to get, including the FICO Auto Score and FICO Bankcard Score. 

FICO score ranges

In general, the higher your FICO score, the more attractive you appear as a borrower. On the other hand, the lower your score, the less likely you are to be approved for credit. And if you are approved, you’re more likely to pay higher interest rates.

Each lender has its own strategy for incorporating FICO scores into lending decisions, and each will have its own cutoff for what’s considered an acceptable level of risk for a borrower. That said, FICO scores generally fall into the following ranges:

The good news is you don’t have to have excellent credit to borrow money at affordable rates. Based on these ranges, a “good” FICO credit score would be considered anywhere from 670 to 739. Scores in this range are “near or slightly above the average of U.S. consumers,” according to FICO, and are strong enough to qualify for the lowest rates and best loan terms in many cases. 

How to check your FICO score 

There are a few ways to check your FICO score. Many credit card issuers allow cardholders to view their scores for free, either on their monthly statements or by logging into their online account portal. Keep in mind, however, that most issuers only provide your score from one of the credit bureaus, not all three. American Express, for instance, provides FICO scores based on Experian credit reports, while Citibank provides scores based on Equifax reports.

If you don’t get free access to your score through a credit card provider—or you want a more comprehensive overview of your scores from all three bureaus—there are services that provide this information for a fee, such as MyFICO. 

What is VantageScore?

VantageScore was created to introduce much needed competition into the credit scoring market, according to Jeff Richardson, senior vice president of marketing and communications at VantageScore Solutions and host of “THE SCORE” podcast. “Founded by Experian, Equifax, and TransUnion in 2006, our mission is to use data analytics to drive innovation and inclusion—giving consumers more credit access, and helping lenders make better lending decisions,” he says.

VantageScore isn’t used quite as often as FICO by lenders, but it has gained quite a bit of traction over the years.

Research conducted by Charles River Associates found VantageScore credit score usage among banks, fintechs, and other financial institutions grew 46% year-over-year, from 6 billion credit scores in 2021 to almost 9 billion in 2022. Non-financial institution usage (such as telecom and utilities companies) also grew 18% year-over-year from almost 9 billion to more than 10 billion.  

How VantageScores are calculated

If you’re building credit from scratch, your VantageScore can be established much faster than FICO. In fact, your score can be calculated in as little as one month of an account appearing on your credit report. Richardson notes that VantageScore can also score those that haven’t used credit for more than six months.

“VantageScore’s consumer-friendlier model can issue credit scores to 30–35 million people considered ‘unscoreable’ by FICO,” Medina adds.

However, the way your VantageScore gets calculated depends on the exact version. VantageScore 3.0 remains the most commonly used one. The newer VantageScore 4.0, which was released in 2017, is used less often. This version is similar to 3.0, but emphasizes payment history and new credit a bit more, and depth of credit a bit less. 

Here is a closer look at how these two versions of VantageScore compare.

VantageScore score ranges

Like FICO, each lender determines a borrower’s acceptable level of risk based on their VantageScore, which can vary. In general, though, VantageScores can be broken down into the following ranges: 

The best rating you can have under the VantageScore model is “superprime,” which indicates that you’re a financially responsible borrower and you can be trusted to pay back what you borrow. However, you are still considered a trustworthy borrower with prime credit and likely won’t have much trouble getting approved by lenders if you fall in this range.

On the other hand, you might struggle to qualify for the best interest rates and terms if you have near-prime credit, or get approved at all if you’re considered a subprime borrower.

How to check your VantageScore 

There are many ways to see your VantageScore for free. Again, many financial institutions offer free VantageScores, even to non-customers. For example, Capital One offers the CreditWise tool to anyone who signs up. Non-Slate Chase customers can view their VantageScore and credit report for free through the Credit Journey platform. Again, these banks tend to provide a single score from one of the credit bureaus and not all three.

You can also sign up with a site such as Credit Karma or Credit Sesame to see multiple VantageScores for free. However, if you want to get a comprehensive look at your VantageScores, again, you’ll need to sign up for a paid service.

The takeaway 

Building and improving your credit score is the key to borrowing money at affordable rates. Good credit also helps you get approved to rent an apartment, open a utility account, and more. Understanding how your scores work and how they’re calculated can help you make better decisions that lead to higher scores.

“However, the best way to understand your credit is to look beyond the credit score and focus on the details in the credit report and make sure there are no discrepancies,” Medina says. You can pull a free copy from all three credit bureaus at annualcreditreport.com.