FICO Credit Score and VantageScore: What’s the Difference?

Lenders and creditors use these models to calculate your credit score, the number that predicts your ability to repay a debt, such as a personal loan or car loan. Here’s what you need to know about their varying methods and criteria.
by Geoff Williams |January 25, 2024

You’ve probably heard that a high credit score is important in order to get the best possible loan terms. That’s true, but understanding credit scores can be challenging, especially given there are numerous types of scoring models.

The two leading models are the FICO® credit score and VantageScore®, and both use slightly different criteria and methods to analyze your credit report to come up with your score.

The basics of a FICO credit score

Even though credit scores have existed in some form for generations, the FICO score as we know it didn’t actually debut until 1989, and by the mid-1990s, the mortgage industry in particular had embraced it. Other lenders, like credit card issuers, look at FICO credit scores too, but for the most part, if you are in the market to buy a house, it’s the health of your FICO credit score that may determine whether you get an attractive loan or a less appealing one. Whether somebody wants one or not, a FICO score is attached to a borrower after they’ve established a payment history of six months and once a payment has been reported to a credit bureau.

Lenders purchase credit scores from FICO or VantageScore to use as a predictor of whether somebody’s likely to pay back a loan. Whether you have a 300 or 850 FICO credit score or somewhere in between depends on five main factors, listed here in order of importance, from most to least:

  • Payment history. If you have a history of not paying bills on time, this will hurt your credit score.
  • Amount of money you owe. If you owe more than lenders believe you can pay back in a timely matter, this can lower your credit score.
  • Length of credit history. If you have a short history of making payments – maybe you’re a college student, for instance – this shouldn’t hurt your credit score, but a long history will likely help it.
  • Credit mix. If you have a strong mix (say, credit cards, a mortgage, an auto loan and student loans), this can help your credit score.
  • New credit. If you open numerous accounts at once, this can lower your credit score.

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The basics of a VantageScore credit score

VantageScore was founded 27 years after FICO, in 2006, by the three main credit bureaus (Experian, Equifax and TransUnion), although it operates as an independent company. Because of this, some lenders use FICO to determine a borrower’s creditworthiness and others use VantageScore. 

Initially, a VantageScore ranged from 501 to 990, but for the past 10 years it’s ranged from 300 to 850, just like a FICO score. It calculates a borrower’s credit score fairly similarly to FICO, with a few subtle differences, mostly in how the criteria is labeled. The main criteria includes:

  • Payment history. Are you paying your bills on time? If so, this could potentially help your score go up.
  • Depth of credit. Having a combination of older and newer accounts and a good mix of different types of loans can be good for your credit.
  • Credit utilization. Your VantageScore could increase if you are borrowing between 0% and 30% of your available credit. If you borrow more than 30%, your VantageScore may go down.
  • Balances. The VantageScore takes into account how high your balances are, as noted on the company’s website:“High balances can hurt your score, even if you’re current on all of your payments. But the effect isn’t severe, especially in the VantageScore 4.0 model where it only accounts for 6% of your total score.”
  • Available credit. This is related to credit utilization. If you have a high amount of credit available, this can help raise your credit score.
  • Recent credit. When you apply for a loan, that can potentially ding your credit score by a few points. However, recognizing that sometimes people shop around for the right loan, VantageScore counts all loan applications made within 14 days as one application.

Which credit score should matter to you more?

In truth, while lenders have preferences, for consumers, these scores are equally important. It is worth noting that, while you’ll get a VantageScore the moment you take out any type of loan that goes onto a credit report, the FICO timing is different; you won’t get a FICO credit score until you’ve had six months of credit activity on your credit reports. Ultimately, what’s essential is working on building your credit.

How to maintain a good credit score

There are complexities to managing money in general, but the approaches for boosting your credit score and keeping it high are fairly straightforward. Here are four good guidelines.

  • Pay your bills on time. The longer you keep this up, the better your credit score may be over time.
  • Borrow only what you know you can easily pay back since overborrowing can negatively impact your score. In fact, many lenders like to see people borrowing no more than 30% of their available credit. One strategy you may want to adopt: Keep a stash of money in an emergency savings account so if you run out of funds, you can tap into that rather than max out your credit cards.
  • If you need a loan or a credit card, apply for one — but be selective. If you apply for, say, a bunch of store credit cards because you like the brands or enticed by discounts, it can look to lenders like you might be a financial risk.
  • Monitor your credit history maintained at all three credit bureaus — Equifax, Experian and TransUnion — by getting free online credit reports at AnnualCreditReport.com. Every three months, or at least once a year, tends to be a good cadence to catch any mistakes that wind up on your credit report (such as a loan for somebody else with your name) before they have a chance to bring your score down.
The content reflects the view of the authors of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article.