FICO vs. VantageScore: Scoring Models – How They Differ

Credit Report , Credit Score

April 13, 2021
7 mins read

Did you know that there is more than one scoring model to calculate your credit score? The two main scoring models to calculate your credit score are FICO and VantageScore and lenders may look at one, or both of them when making decisions to issue a credit or approve you for loans.

The Fair Isaac Corporation introduced the first FICO scoring model to lenders in 1989. According to the company, FICO® scores are used today by 90% of top lenders to make lending decisions. The VantageScore model wasn’t introduced until 2006. It was developed by the three major consumer credit bureaus — Equifax, Experian, and TransUnion — to create a more predictive scoring model that is easy to understand and apply. Although both models are designed to predict a consumer’s ability to repay a debt, they do not treat all credit data equally. 

FICO bases its scoring model on credit reports from millions of consumers at once. They gather these reports from the three major credit bureaus and analyze the reports’ anonymous consumer data to generate an accurate scoring model. Alternatively, VantageScore uses a combined set of consumer credit files, also obtained from those same three credit bureaus, to come up with a single formula.


Scoring Models

FICO and VantageScore share some similarities but there are important differences. For instance, both use the same five categories to calculate your credit score:

Payment history 

What’s The Same?

When looking at your payment history, FICO and VantageScore will take into consideration the date of when the last late payment occurred, the number of accounts with late payments, and the number of payments that have been missed on an account. 

What’s Different?

FICO treats all late payments the same. VantageScore however, gives different weights to different types of late payments. A missed mortgage payment, for example, negatively impacts your score more than any other type of late payment.

Length of credit:

What’s The Same? 

FICO and VantageScore will both calculate the length of your credit history. You can think of this as your credit age. It can show lenders how long you have been responsible for managing your credit.

What’s Different?

It can take less time to establish a credit score with VantageScore than with FICO. That means if you open a new credit account, you can probably get a score with VantageScore in one to two months. FICO requires at least six months of credit history and at least one account reported to a Credit Reporting Agency within the last six months. VantageScore only requires one month of history and one account reported within the past two years. 

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Types of credit: 

What’s The Same? 

Both FICO and Vantage reward you for having a diverse credit profile. This shows lenders that you can manage different types of credit like a car loan, student loan, or credit card. 

What’s Different?

VantageScore considers recurring payments like rent, utilities, and phone bills. Meaning you can get a credit score even if you have a limited credit history. You can use services like RentReporters, Experian Boost, or Self to help improve your credit scores. FICO considers only mortgages, auto loans, and student loans. A newer scoring model, FICO 9, is now beginning to calculate these other types of credit lines as well. 

Credit usage: 

What’s The Same? 

Credit Usage is also known as credit utilization. This is the well-known 30% rule, which tells us to keep our debt usage below 30% of our total available credit. For both FICO and Vantage, it is a good guideline and lower is better for your score. 

What’s Different?

VantageScore 4.0 looks back and considers your trended utilization, such as whether you usually only make minimum credit card payments or pay your bill in full. FICO Score and other VantageScore models don’t.

Recent inquiries: 

What’s The Same? 

VantageScore and FICO both penalize consumers who have multiple hard inquiries in a short period of time, and they both do “deduplication.” Deduplication is important for things like auto loans, where your application may be sent to multiple lenders, thereby resulting in multiple inquiries. Both FICO and VantageScore don’t count each of these inquiries separately — they deduplicate them or consider them one inquiry.  However, the timespan they use for deduplication differs. 

What’s Different?

FICO uses a 45-day span to deduplicate your credit inquiries. VantageScore limits its focus to only a 14-day range. VantageScore also looks at multiple hard inquiries for all types of credit, including credit cards.

Maintain a healthy FICO and Vantage Score

Some other important differences are how they collect their data. For example, FICO’s scoring model is based on millions of people’s credit reports. This data is then used to generate a scoring model. VantageScore, on the other hand, uses a combined set of consumer credit files that are used to come up with a single formula.

Although there are many differences between VantageScore and FICO credit scores, and each company’s various credit scoring models – the same behavior can help all your scores. As a result, if you focus on building healthy credit habits, like paying your bills on time, you can improve all your scores.

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