VantageScore vs. FICO: A Comprehensive Comparison

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Understanding VantageScore and FICO Credit Scores

In the U.S., two companies dominate the credit scoring industry: FICO® and VantageScore®. While FICO® is the industry leader, VantageScore® has been gaining market share since its creation by the three major credit reporting agencies in 2006. Both companies develop credit scores that lenders and creditors use to evaluate applicants and manage customer accounts. However, VantageScore and FICO® scoring models use slightly different criteria to determine your scores.

VantageScore and FICO: Multiple Credit Scores

Both VantageScore and FICO® create credit scoring models—software that analyzes a credit report to generate a credit score. These consumer risk scores aim to predict the likelihood that a person will fall at least 90 days behind on a bill within the next 24 months.

The VantageScore models and the base FICO® models are generic credit scores, meaning they’re created for use by a wide range of creditors, such as private student loan companies, online lenders, and card issuers. FICO® also creates industry-specific auto and bankcard scores, which are tailored for auto lenders and card issuers.

As consumer behavior changes, VantageScore and FICO® update their scoring models to remain predictive and incorporate new technology, information, and industry practices. The first VantageScore model, version 1.0, was launched in 2006, with the latest version, 4.0, released in 2017. The FICO® base scoring model dates back to 1989, with the latest versions being FICO® Score 8 (launched in 2004) and FICO® Score 9 (launched in 2014).

VantageScore vs. FICO Credit Scores

While VantageScore and FICO® scores aim to predict the same thing, their credit scoring models aren’t identical. Here are some of the main differences between the two companies and their scores:

Tri-Bureau vs. Bureau-Specific Models

VantageScore creates a single tri-bureau model that can be used with a credit report from Experian, Equifax, or TransUnion. FICO® creates bureau-specific scoring models, meaning there are three slightly different FICO® Score 9 models—one for each of the major credit reporting agencies.

Minimum Scoring Requirements

For FICO® to create a credit score based on one of your credit reports, you’ll need to have a credit account (or “tradeline”) that’s at least six months old and activity on a tradeline during the previous six months. VantageScore may score you as long as your credit report has at least one account, even if the account is less than six months old.

The Score Ranges

The base FICO® Scores range from 300 to 850, while FICO’s industry-specific scores range from 250 to 900. The first two versions of the VantageScore ranged from 501 to 990, but the latest VantageScore 3.0 and 4.0 use the same 300-to-850 range as base FICO® scores.

What qualifies as a good score can vary from one creditor to another. However, on the 300-to-850 scale, a score of at least 670 (for FICO®) and 700 (for VantageScore) generally qualifies as having good credit.

The Importance of Different Credit Scoring Factors

The impact of a specific action on your credit scores depends on your overall credit profile and the scoring model. However, FICO® and VantageScore only consider the information in one of your credit reports when determining a score, and they generally place similar relative levels of importance on the same types of information.

The main factors that impact your score can be separated into several categories:

• Payment history: Whether you’ve made on-time payments, late payments, have accounts in collections, defaulted on debts, or declared bankruptcy.
• Credit usage: Your credit utilization rate, or the amount of available credit you’re currently using with your revolving credit accounts, such as credit cards. The amount you owe on installment loans is also important to a lesser extent.
• Length of credit history: How much experience you have managing credit accounts.
• Types of accounts: Whether you have experience using and paying off different types of credit accounts.
• Recent activity: Whether you’ve recently applied for new accounts that led to hard inquiries.

Credit Utilization

Your utilization rate can be an important scoring factor. Most scores only consider your most recently reported revolving account balances and limits in this factor, which is essentially your total credit card balances divided by your credit limits on those accounts. This shows how much available credit you’re using.

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.

Collection Accounts

Although unpaid collection accounts can hurt both your FICO® and VantageScore credit scores, collection accounts are treated differently depending on the type of account, whether it’s been repaid, and the specific scoring model.

For example, FICO® Score 9 ignores paid collection accounts and puts less importance on unpaid medical collections than other types of unpaid collections. FICO® Score 8 doesn’t differentiate between medical and non-medical collections and doesn’t ignore paid collection accounts that appear on your report. Both versions ignore collection accounts when the original account’s unpaid balance was under $100. Medical collection accounts won’t show up on your credit report if they’re under $500 and less than 365 days past due.

VantageScore 3.0 and 4.0 both ignore paid collection accounts and ignore even unpaid medical collection accounts, regardless of their balance.

Credit Inquiries

A hard inquiry gets added to your credit report when you apply for a new credit account, and it can hurt your credit scores (though usually for less than a year). However, scoring model creators understand that applying for multiple loans to compare your options and offers is savvy rather than risky behavior.

VantageScore addresses this by deduplicating (or “deduping”) any inquiries that occur within a 14-day window. If you apply for a credit card today, a personal loan tomorrow, and five auto loans next week, you may have seven new hard inquiries on your credit report, but VantageScore scores you as if you only had one hard inquiry during that period.

Recent FICO® Scores have a 45-day dedupe window, while older models (including those still used for mortgage lending) have a 14-day dedupe window. However, FICO® Scores only dedupe multiple inquiries from student loan, auto loan, and mortgage applications. FICO® also has a hard-inquiry buffer, meaning any mortgage, auto, or student loan hard inquiries from the previous 30 days won’t impact your FICO® scores.

The Same Behavior Can Help All Your Scores

There are many differences between VantageScore and FICO® credit scores, and each company’s various credit scoring models. However, all the scoring models try to predict the same thing using the same underlying data. As a result, if you focus on building a good credit history, you can improve all your scores. One way to do that is to monitor your credit regularly. Experian’s free credit monitoring service provides access to your Experian FICO® Score, credit report, and other information that can help you better understand how credit scores work and actions you can take to improve all your credit scores.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to help you navigate your mortgage options and find the best solutions for your financial needs.

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