FICO vs. VantageScore: What’s the Difference?

Since 1989, FICO credit scores, those developed by Fair Isaac, have been commercially available for lenders to use in their risk assessment processes – to help them approve and deny applications.

VantageScore credit scores, meanwhile – developed by VantageScore Solutions – have been commercially available for lenders since 2006.

The two scoring systems have their similarities, and their differences, which we’ll explore here.

FICO vs. VantageScore: The Companies

FICO, an abbreviation for Fair Isaac Corp., is a publicly traded company based in California. Their stock is available for purchase on the New York Stock Exchange under the ticker symbol FICO.

VantageScore Solutions is an independent company based in Connecticut that holds the intellectual property rights to the VantageScore credit score. The VantageScore credit score was originally designed and developed by a team of people from the three consumer credit reporting agencies: Experian, TransUnion and Equifax.

FICO vs. VantageScore: The Scores

Over their history, FICO has developed many different types of credit scores. Fraud scores, credit risk scores, insurance scores, collection scores, small business scores, medical adherence scores, custom application scores, and bankruptcy scores are just a sampling of FICO’s scoring systems.

VantageScore, at this point in time, focuses solely on credit risk scores. Credit risk scores, the credit scores sold by the credit bureaus to lenders, are the most recognized credit scores as they’re the most commonly used score type.

FICO and VantageScore’s respective risk scores are both scaled with a 300 to 850 scoring range (although the first two generations of VantageScore credit scores were scaled 501-990).

How Many Scores Do We Have?

In short, a lot. Think of scoring systems as iPhones or the operating system on your PC or MacBook. Every few years a newer version is developed and becomes commercially available. However, that doesn’t mean that everyone’s going to move to a newer version right away or stop using prior versions.

Under the VantageScore brand there are four generations of scores. Under the FICO brand the number is considerably higher. At one point I was able to identify over 50 different FICO credit score variations, all of them different.

Newer generations of scoring systems pile on top of prior versions, which is why nobody has “one credit score,” but rather dozens of credit scores, which will constantly be different over time as the data on your credit reports change.

Related: How Often Does My Credit Score Change?

Which Credit Score Does My Lender Use?

The larger and more sophisticated the lender, the more complex their underwriting processes. A small bank or credit union may only use one credit report and one credit score type to make all of their lending decisions. A megabank may use data from all three of the credit bureaus and several credit scores in order to make their decisions.

According to FICO, “90% of top lenders use FICO scores when making lending decisions.” On top of that, FICO currently enjoys a virtual monopoly in the mortgage environment thanks to Federal Housing Finance Agency policy, which includes mortgage financing giants Fannie Mae and Freddie Mac.

Meanwhile, according to VantageScore, “More than eight billion VantageScore credit scores were used in a 12-month period in 2015-2016,” and “over 2,400 lenders and other industry participants, including 20 of the top 25 financial institutions, used VantageScore credit scores from July 2015-June 2016.”

So the answer to the prior question is: Unless you’re applying for a mortgage (in which case they’re almost certainly using your FICO score), you won’t know which credit score your lender uses, and you won’t know which of your credit reports they’ll pull. If you’re denied, however, then you’ll get a letter identifying the credit bureau and the score that the lender used as the basis for their decision.

How Can I Improve My Credit Scores?

This is an easy one. While you have dozens of credit scores, you only have three credit reports that matter, one each from Equifax, Experian and TransUnion. Every single one of your several dozen credit scores is based on the information in those reports.

So, if you can avoid derogatory information like defaults and missed payments, maintain minimal credit card debt, avoid having too many accounts with balances, and apply for credit sparingly — and keep the streak going for a while — then you’re going to have great credit scores.

The answer is so simple is because despite their differences, both credit scoring systems consider the same things. In order of importance, these are: the presence of lack of derogatory information on your credit reports, your debt, the age of your credit report, your pursuit of new credit (in the form of credit inquiries from lenders), and the variety and types of accounts.

As long as you do well in all of those categories, then you can’t have anything other than great scores.

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John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. He has written four books on the topic and has been interviewed and quoted thousands of times over the past 10 years. With time spent at Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.

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