Differences between FICO and Vantage Credit Score
At a Glance
Regarding credit scores, the detail and accuracy provided by FICO and Vantage Score can make a huge difference in your financial life. One significant difference between the two is that FICO provides borrowers with more detail and insight into their loan qualifications than the Vantage Score model. FICO also calculates credit scores across hundreds of possible variables and uses complex algorithms to assign a score, while Vantage Score only uses six categories and assigns a simpler score.
Vantage Score 3.0 also considers all of the accounts on users’ credit reports, even so-called “non-traditional” ones like utility payments. The latest Vantage Score model also rewards people for paying off their balances in full every month, which is not factored into FICO scoring models. Ultimately, understanding the differences between FICO and Vantage Score credit scores can help you better understand your individual needs when borrowing money.
In this article, you’ll learn:
What is a FICO score?
A FICO score is a credit score lenders use to determine a borrower’s creditworthiness. The score is calculated based on the borrower’s credit history, including their payment history, the amount of debt they have, the length of their credit history, and the types of credit they have used. The score is named after the company that created it, the Fair Isaac Corporation (FICO). The higher the score, the more creditworthy the borrower is considered to be and the more likely they are to be approved for credit at favorable terms. FICO scores are widely used in the U.S. and are an important factor in many financial decisions, including mortgage loans, credit card applications, and car loans.
Related: FICO Score vs. Credit Score
What is Vantage Score?
Vantage Score is a credit scoring model that is used to assess an individual’s creditworthiness. It was developed by the three major credit reporting agencies in the U.S.: Equifax, Experian, and TransUnion.
Vantage Score uses a proprietary algorithm to analyze a person’s credit report and generate a score. Lenders and other financial institutions use this score to determine a borrower’s credit risk, whether to extend credit and at what interest rate.
Vantage Score is designed to be an alternative to the FICO score and is used by many lenders and other financial institutions in the United States. It considers various factors, including payment history, credit utilization, credit age, types of credit used, and recent credit inquiries.
It has several versions, with the most recent being Vantage Score 4.0. The company periodically updates its scoring model to reflect changes in the lending industry and consumer credit behavior.
Is the average FICO Score in the U.S., while the average Vantage Score is just 688. 711
FICO Score vs Vantage Score: Key differences
FICO Score and Vantage Score might have a similar purpose, but they have distinct differences that make both valuable to lenders.
1. Company history
FICO Score is a credit scoring system created by the Fair Isaac Corporation (FICO), founded in 1956. The company initially focused on providing analytics and decision-making tools for various industries, including finance, insurance, and healthcare. In the 1980s, FICO began developing its credit scoring system, quickly gaining popularity among lenders and becoming the dominant model in the U.S.
Conversely, Vantage Score is a credit scoring system developed jointly by the three major credit reporting agencies in the United States: Equifax, Experian, and TransUnion. Vantage Score was launched in 2006, responding to the need for an alternative credit scoring model to provide more accurate and consistent results across all three credit bureaus.
2. Scoring criteria and weightings
FICO Score uses a complex algorithm that considers five major categories of information: payment history, amounts owed, length of credit history, new credit, and types of credit used. Each category is weighted differently, with payment history and amounts owed being the most important factors.
Vantage Score, on the other hand, uses a similar scoring system but with a slightly different approach. It also considers payment history, amounts owed, length of credit history, new credit, and types of credit used but emphasizes payment history and credit utilization more. Additionally, Vantage Score considers the impact of factors like recent credit behavior and available credit on a person’s credit score.
3. Credit score ranges
FICO Score ranges from 300 to 850, with higher scores indicating better creditworthiness. A score of 800 or above is generally considered excellent, while a score between 670 and 739 is considered good. A score below 580 is considered poor.
Vantage Score also ranges from 300 to 850 but has slightly different categories for creditworthiness. A score of 750 or above is considered excellent, while a score between 700 and 749 is considered good. A score between 650 and 699 is fair, and a score between 550 and 649 is poor.
Learn more: What Is a Good Credit Score?
4. Length of credit history required
FICO Score requires a credit history of at least six months, with at least one account that has been active in the past six months. However, to receive a FICO Score, a person generally needs to have at least one account reported to the credit bureaus in the past six months.
On the other hand, Vantage Score requires a credit history of at least one month and at least one account reported to the credit bureaus within the past two years. This means that someone who is just starting to build credit or has a very short credit history may be able to generate a Vantage Score, while they may not be able to generate a FICO Score.
5. Credit inquiries
Credit inquiries occur when a lender or other party requests access to your credit report. There are two types of credit inquiries: hard inquiries and soft inquiries. Hard inquiries occur when you apply for credit, like a loan or credit card. Soft inquiries, on the other hand, occur when you check your own credit report or when a lender checks your credit report for promotional purposes.
FICO Score counts all credit inquiries made within the past 12 months, but it distinguishes between inquiries made in connection with credit applications and inquiries made for other reasons, like promotional inquiries. FICO Score treats multiple inquiries for the same type of credit (like a car loan or mortgage) within a short period of time as a single inquiry, assuming that you are shopping around for the best rate.
Vantage Score also counts all credit inquiries made within the past 12 months, but it treats all inquiries made within a 14-day period as a single inquiry. Vantage Score does not distinguish between different credit inquiries, so all inquiries are treated the same.
Related: Do Credit Inquiries Affect Your Credit Score?
6. Tax liens and civil judgments
In the past, FICO Score included tax liens and civil judgments on credit reports as negative items that could lower your credit score. However, starting in 2017, FICO Score stopped considering tax liens and civil judgments in its credit scoring models, meaning they no longer impact your FICO Score.
Vantage Score 4.0, released in 2017, also stopped considering tax liens and civil judgments in its credit scoring models. However, Vantage Score 3.0, the previous version of the model, still considers these items, and they can have a negative impact on your Vantage Score.
7. Collection Accounts
FICO Score considers collection accounts as a negative factor in determining creditworthiness. When a collection account is added to a credit report, it can significantly lower a person’s FICO Score, regardless of the size of the debt. FICO Score treats all collection accounts equally, whether they are medical debts or other types of debts, and the score will be impacted regardless of whether the collection account is paid or unpaid.
Vantage Score has a more nuanced approach to collection accounts and considers the type of collection account when determining creditworthiness. Medical collections are treated differently from non-medical collections, and paid collections are treated differently from unpaid collections. This means that a paid medical collection may impact a person’s Vantage Score less than an unpaid non-medical collection.
Similarities between Vantage Score and FICO credit score
Even though there are distinct differences between these two models, there are also plenty of similarities.
1. Overall scale
Both Vantage Score and FICO Score range from 300 to 850, with higher scores indicating better creditworthiness. This means that a person can use either score to understand their overall credit health and to see how they compare to other consumers.
Additionally, both scores use similar categories to calculate credit scores. While the exact criteria and weighting may differ between the two scores, the overall categories are similar, meaning that a person can generally understand the factors most important for their credit health, regardless of which score they use.
2. Design objective
Lenders use both Vantage Score and FICO Score to determine whether someone is likely to repay a loan or credit card balance on time and to what extent they are a credit risk. They are both designed to be reliable and predictive of future credit behavior and to provide lenders with a standardized and consistent way to evaluate credit applicants.
The design objectives of Vantage Score and FICO Score are also similar in that they are both intended to be fair and objective.
3. ECOA compliance
The ECOA is a federal law that prohibits credit discrimination on the basis of certain personal characteristics, like race, gender, age, religion, and national origin. The law applies to all types of credit, including credit cards, mortgages, and car loans.
Both Vantage Score and FICO Score are designed to comply with ECOA requirements and do not take into account factors like race, gender, religion, or national origin when generating credit scores. This means that the credit scores generated by either scoring model should be a fair and objective representation of a person’s creditworthiness, regardless of their personal characteristics.
Additionally, both Vantage Score and FICO Score allow for consumers to request and review their credit reports, as required by the Fair Credit Reporting Act (FCRA), another federal law designed to protect consumers and ensure the accuracy of credit reporting. Consumers can review their credit reports and dispute any inaccuracies or errors that may impact their credit scores.
FAQs
Lenders can use Vantage Score and FICO scores to assess an individual’s creditworthiness, depending on their preference and the type of credit they offer.
Vantage Score is used by a wide range of lenders and financial institutions in the United States. Some of the types of organizations that use Vantage Score include:
- Banks and credit unions: Many banks and credit unions use Vantage Score to evaluate potential borrowers for credit cards, personal loans, and other types of loans.
- Credit card issuers: Credit card issuers use Vantage Score to evaluate credit card applications and set credit limits.
- Mortgage lenders: Mortgage lenders use Vantage Score to assess the creditworthiness of potential borrowers and determine the interest rate on a mortgage.
- Auto lenders: Auto lenders use Vantage Score to evaluate loan applications for new and used cars.
- Online lenders: Many online lenders, including peer-to-peer lenders, use Vantage Score to evaluate loan applications.
- Landlords: Some landlords use Vantage Score to screen potential tenants.
- Insurance companies: Insurance companies may use Vantage Score as part of their underwriting process to determine the likelihood that a policyholder will file a claim.
It’s not possible to directly convert a Vantage Score to a FICO score, as the two credit scoring models use different algorithms to calculate credit scores. However, there are ways to estimate how a Vantage Score might translate to a FICO score.
One way to do this is to use conversion tables provided by the credit reporting agencies that calculate how a Vantage Score 3.0 might translate to a FICO score. However, it’s worth noting that these conversion tables are only estimates and should not be relied upon as an exact translation.
Another way to estimate how a Vantage Score might translate to a FICO score is to use credit score simulators available through credit monitoring services. These simulators can estimate a FICO score based on a Vantage Score, but again, it’s important to remember that these estimates are not exact and may not reflect the score that a lender would see when evaluating a credit application.
While it’s not strictly necessary to track all of your credit scores, it can be helpful to monitor your FICO score and Vantage Score and any other credit scores that lenders and financial institutions may use. This is because different lenders and financial institutions may use different credit scoring models to assess your creditworthiness.
Monitoring your credit scores can help you keep track of your creditworthiness over time and identify any changes or errors on your credit report that could be affecting your scores. It can also help you to better understand how lenders view your creditworthiness and can help you to identify areas where you may need to improve your credit.
You don’t need to check your credit scores every day, but it’s a good idea to check them periodically, like once a month or once every few months. You can get your credit scores for free from several sources, including your credit card issuer, some banks and credit unions, and through free credit monitoring services.
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