FICO scores are one type of credit score, but they are not the only way lenders measure credit. There are some key differences between each credit-scoring model that may help you understand what goes into creating each score.

Why are FICO scores and other credit scores so important?

Lenders use FICO scores or other credit scores to help them determine your overall creditworthiness or help decide if you are too risky to take on a new loan or line of credit.

While FICO scores are popular, credit scores may or may not be generated using the FICO model. There are other models to be aware of, including another popular option, the VantageScore scoring system.

These credit scoring models use may of the same factors to create your credit report, but may do so in a different way, while coming to different conclusions about your creditworthiness.

So the scores you see may vary based on a number of factors, such as which scoring model the institution uses, and which credit bureau the model pulls information from.

FICO scores – Things to know

The Fair Isaac Corporation (FICO) has provided lenders with their credit scoring model since 1989, and it has gone through a number of updates and changes to adapt with the times since then.

FICO estimates that 90 percent of top lenders use general FICO scores. FICO also offers industry-specific models which may help lenders in these industries with distinct scores for specific products such as credit cards, mortgages, or auto loans.

This is important, as even if you personally view your credit scores, they may still not be the same scores the financial institution uses and sees as you apply.

The general FICO scores are most common, and are the scores you are likely to see when requesting your credit report.

General FICO scores range from 300 – 850, and include the following factors, each with their own weighted score:

  • Payment history –35%

  • Debt owed – 30%

  • Age of credit history – 15%

  • New credit – 10%

  • Credit mix – 10%

The company analyzes the data in your report to create a score for you. Your creditworthiness depends on the score range you fall in. In general, FICO divides the credit score ranges into a few groups:

  • 800+ – Excellent

  • 740 - 799 – Very good

  • 670 - 739 – Good

  • 580 - 669 – Fair

  • Below 580 – Poor

FICO scores for specific industries have a slightly broader range from 250 to 900, and give a more specific picture based on a certain type of credit.

Your credit score will determine things like the interest rates you have available to you on a loan, as well as other loan and credit terms.

VantageScore – What you need to know

Vantage score is a newer creation from the three major credit bureaus – Equifax, Experian, and TransUnion. They created the scoring model in 2006, and it has been updated since. VantageScore uses a range of 300 to 850 to measure credit scores.

There are some notable differences between Vantage Score and FICO scores. For instance, FICO requires you to have an open credit account for 6 months or more and to have at least one account that was reported to the major credit bureaus to get a credit score.

On the other hand, the VantageScore model may be able to provide a credit score using as little as one month of history and one reported account in the past 2 years.

VantageScore provides credit scores to more than 2,200 financial institutions. Their scores are based on a number of factors, each with their own level of influence:

  • Payment history – highly influential

  • Age and type of credit – highly influential

  • Overall percentage of credit usage – highly influential

  • Total credit and debt owed – moderately influential

  • Recent credit behavior – less influential

  • Available credit – less influential

These are very similar factors to what FICO uses in their scores, which shows you how important some of these factors truly are.

VantageScore also deals in general score ranges, including:

  • 750+ – Excellent

  • 700 - 749 – Good

  • 640 - 699 – Fair

  • 300 - 639 – Needs improvement

Whether the institution uses a FICO or VantageScore model, keeping your credit scores as high as possible gives you the best credit opportunities available.

Proprietary scores

While FICO and VantageScore are the two big players when it comes to credit scoring, a number of financial institutions choose to use their own scoring models, which may not follow the FICO or Vantage score models. Additionally, each of the three major credit bureaus creates their own credit scores, often called “educational scores” as they don’t influence credit decisions most of the time.

Final thoughts

While FICO scores and other credit scores do have some differences, they are more alike than they are different.

Regularly checking your credit scores can help you understand why your scores stand where they do – and what you can do to improve them. No matter which scores you look at, they can help give you an idea of your overall credit health, as they mainly use the same factors to judge your credit report.

As you look to repair your credit, regularly checking in with your credit scores can help you see how your financial decisions are affecting your future, and may help keep you on track to build positive credit or address any issues on your credit reports before they make a large impact on your scores.

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