The Difference Between FICO and Other Credit Scores

When lenders and credit card providers want to assess your credit risk, the most important data they take into consideration is your credit score. This three-digit figure can signify a person’s creditworthiness, and so a higher credit score will help you get loans, credit cards, and insurance plans at better rates, and vice versa. There are multiple different types of credit scores, but two of the most popular ones are the Fico Score and the Vantage Score.

What Is a FICO Score?

FICO Score, the most widely used credit scoring model in the U.S, was originally developed by Fair Isaac Corporation. It is used by lenders to help determine whether or not you will pay your bills on time based on your past history of responsible borrowing. The FICO Score typically ranges between 300-850 and higher is better. The categories that make up the FICO Score include your payment history (35%), amounts owed (30%), length of credit history (15%), credit mix (10%), and new credit (10%).

The FICO Score vs. Other Scoring Models

Another well-known credit scoring model is the VantageScore, which was developed in the year 2006 and is owned by Experian, Equifax, and TransUnion, the three major credit scoring bureaus. FICO® Scores and VantageScores are alike in many ways. The two scoring models both use the same five key components to calculate credit scores. While both models weigh each of the five factors equally, there are a few key differences between the scoring models. For instance, the FICO makes use of anonymized financial data of consumers that are compiled by each of the credit bureaus and provides three bureau-specific credit scores. In comparison, the VantageScore uses a single model across the three major bureaus to produce a score that is based on the financial data of consumers.

What Score Matters More?

According to most industry experts, the FICO Score is used by about 90% of the financial institutions in the country – but that doesn’t mean the lender is guaranteed to check your FICO Score and make credit decisions based on what your score is. So, you should actively try to improve all your credit scores.