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VantageScore vs. FICO

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Mark Cappel
UpdatedJun 4, 2013
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    10 min read
Key Takeaways:
  • Fannie Mae and Freddie Mac require lenders to use FICO scores.
  • Why the credit score you see may not be the same score lenders see.
  • Steps you can take to improve your credit score.

How VantageScore & FICO Compare

Your Credit Score: It’s Everything & Nothing

Life is easier with a high credit score. People with high credit scores qualify for the lowest interest rates on car loans, receive instant approval on credit cards, find it easier to rent an apartment, and get quick pre-approval for home loans. A low credit score can make it harder for you to find a low-interest car loan, get approved for credit cards, and qualify for apartment rentals and home loans. Some employers may review your credit report and score when deciding whether to hire you.

Credit Score Categories

Average US FICO credit score in 2012 was 690

However, your credit score is not the only thing potential lenders use to decide whether to approve your loan or set your interest rate. Lenders also look at the number of years you have had steady income, how much existing debt you may have, and other factors, such as the amount of money you have in your bank accounts and if you experienced a recent bankruptcy or mortgage foreclosure. Your credit score, plus these other factors, are pieces of a jigsaw puzzle that creates a picture of your creditworthiness.

What’s a Credit Score? Why You Have More Than 50 Scores

A credit score is like a weather prediction for rain. Weather forecasters say things like, "There’s a 10% chance of rain tomorrow." That means based on all of the raw weather data available, a forecaster predicts an certain area will have a 1 in 10 chance of rain. A credit score is like a weather prediction but instead of using a zero to 100 scale like weather forecasters use for predicting rain, credit score creators use a 300 to 850 scale. An 850 score is a prediction there’s a near-zero chance the consumer will fail to repay a loan. Think of an 850 as a "sunny skies and clear" prediction. A 300 score is a prediction the consumer is a very high credit risk. A 300 score is like a "100% chance of rain" prediction. We all know weather forecasts are imperfect predictions, and credit scores are imperfect predictors, too. That is why lenders look at more than your credit score when making a go/no-go decision to approve your loan.

The credit score software most lenders use are specialized versions of Fair Isaac & Co.’s FICO. FICO was released in 1989, and FICO has been updated periodically since. The specialized versions are based on industry: auto lending, mortgage, or credit card. Consumers can see their FICO score by buying a $15 per month service from FICO’s Web site. Because the consumer score is not a specialized score, the score you buy may differ from the score an auto finance company, mortgage lender, or credit card issuer may see when you apply for one of those loans.

Basic Scoring Models OfferedVarieties of FICO Offered by Credit Reporting Agencies1Credit Reporting Agency Proprietary Scoring Models
• General / Generic • Automotive • Bankcard • Mortgage • Personal finance • Installment loan • Custom• General / Generic • Automotive • Bankcard • MortgageExperian2:• Equifax • Experian • TransUnion
FICO Risk Model, FICO Advanced Risk Score
FICO Risk Score Classic, TransUnion NextGen
1. Fannie Mae and Freddie Mac require FICO scores averaged over two or three CRAs. 2. Experian offers 16 variations of FICO to creditors. 3. TransUnion offers 16 variations of FICO, too. 4. Equifax offers 15 variations of FICO, plus two called Pinnacle.

Sources: Fair Isaac, Vantage­Score, Equifax, Experian

The upstart credit scoring model is Vantage-Score. Vantage-Score got its start in 2005 and is owned by the biggest consumer credit reporting agencies (CRAs) — Equifax, Experian, and TransUnion. The latest version of Vantage-Score was released in the spring of 2013. Vantage-Score 3.0 uses the same scale as FICO, and claims to be more useful than FICO for consumers with limited credit history, such as young people. Like Fair Isaac, Vantage-Score offers three scoring models by industry, plus a score it sells to consumers.

We do not know if Vantage-Score or FICO offer more accurate predictions. We do know Fannie Mae and Freddie Mac require lenders to include borrowers’ FICO scores in their loan applications, which means virtually all US mortgage lenders use FICO. Vantage-Score claims a growing number of lenders use Vantage-Score, but neither Fair Isaac nor Vantage-Score release their customer lists, so it is not possible to know how rapidly Vantage-Score may be growing.

Quick Tip

Consult with the Debt Coach to learn your options for resolving debt, and the costs and time to debt freedom for each.

FICO and Vantage-Score are not the only credit scores in town, which can be confusing. Equifax, Experian, and TransUnion each offer their own credit scores, which do not appear to be based on Vantage-Score. Therefore, it is possible for a consumer to have more than 50 credit scores simultaneously (see the table above).

Because you have more than 50 credit scores, it is possible for you to look at your FICO score online, and a few hours later apply for a loan and be told by a creditor that uses a different FICO version your score is higher or lower than what you expected. This is normal, and should not be alarming unless the scores differ by a large amount.

What’s Behind Your Credit Score

Both Fair Isaac and Vantage-Score share general information about how they calculate FICO and Vantage-Score credit scores. The tables below show the similarities and differences. Notice that your payment history is an extremely important part of both. On-time payments are rewarded, and delinquencies are penalized. The lesson here is clear: Fair Isaac and Vantage-Score think your payment history is an accurate predictor of your future payment behavior.

Weight of VantageScore 3.0’s 6 Factors
Payment HistoryRepayment behavior (current, late or charged-off)Extremely Influential30%
Age And Type Of CreditLength of credit history and types of creditHighly Influential28%
% of Credit Limit UsedProportion of credit amount used/owed on accountsHighly Influential23%
Total Balances/DebtTotal amount of recently reported balances (current and delinquent)Moderately Influential9%
Recent Credit BehaviorNumber of recently opened credit accounts and credit inquiriesLess Influential9%
Available CreditAmount of credit availableLeast Influential1%
* VantageScore 3.0 according to VantageScore ** VantageScore 3.0 according to Experian

Six Factors in VantageScore 3.0. Source: VantageScore and Experian

Vantage-Score 3.0, unlike FICO and earlier versions of Vantage-Score, ignores aged paid-off accounts that were delinquent. The theory is these consumers learned a lesson from their late payments, and shouldn’t suffer a lingering penalty if the account is paid. Vantage-Score 3.0 also ignores late payments from consumers who live in areas struck by natural disasters. The new model scores consumers who have a six-month credit history, which is too short for Fair Isaac to generate a FICO score.

How Fair Isaac Weights 5 Factors in FICO
ItemWeightPositive FactorNegative Factor
Payment history35%Paying accounts on time consistentlyLate or missed payments
Total debt and total available credit30%Low relative credit utilizationHigh relative credit utilization
Length of positive credit history15%Oldest positive accountNo or short credit history
Mix of types of credit10%Variety of tradelinesToo many of one tradeline
New credit applications10%No recent applicationsToo many applications in a short period of time

Key factors in FICO credit score calculation

Which Credit Score Should I Worry About?

As mentioned, you have many credit scores. The most important scores are your FICO scores because FICO is the go-to company for most lenders. FICO charges a fee when a lender or consumer asks for a FICO score. Therefore, beware offers for free credit scores. The offers are either not FICO scores or are offers meant to entice you into signing up for ongoing monthly services, such as credit report monitoring. These services typically cost $15 per month.

Is it worth $15 per month to monitor your credit file and see estimates of your credit score? Yes and no, depending on your situation. Generally, consumers with damaged credit history who are rebuilding their credit with the goal of qualifying for a large loan, such as a mortgage, should consider credit report monitoring to track their progress. However, if you have no plans for a mortgage, refinance or car loan, then credit report monitoring is not worth the expense.

What Can I Do If My Credit Score Is Low?

As you can see in the tables above, a low credit score is the result of negative information appearing in your credit report. (By contrast, no credit score is the result of little or no credit history.) Your low credit score may be the result of errors in your credit history, or bad payment habits. Start by reviewing your credit history.

You can get a no-cost, no-gimmick copy of your credit report from each CRA once each year. If you start with the assumption that the CRAs publish the same information about your history, you can monitor your credit reports for no cost. Go to and request a report from one CRA. Four months from now, order another. Then, four months after that, order one from the third CRA.

Keep a sharp eye for any unexpected negative information or accounts (called derogatories) appearing on your reports. Your reports should include accurate account names, balances, credit limits, and payment history. Everything you see on your credit report helps potential lenders decide whether to extend credit to you and what interest rate to charge if they do put your application in the "yes" pile. Therefore, if you find inaccurate information in one of your credit reports, it pays to correct the error. Dispute any inaccuracies you see in your credit report. Click on the link just mentioned to learn the four steps consumers can take to dispute incorrect information appearing on their credit report.

The three major credit reporting agencies also offer consumers the ability to dispute a credit listing online:

Recovering From Bad Credit

The easiest way to help yourself rise out of a low credit score is to pay your loans and credit card bills consistently and on time. Establish a mixture of accounts (called tradelines in the credit world). Lower your credit utilization. That means, do the opposite of maxing-out your accounts.

Five Steps to an Improved Credit Score
Pay your debts on time
Keep revolving lines below 30% use
Diversify your mix of accounts
Keep your oldest account active
Dispute inaccurate credit report info

Steps to boost your credit score

If you have no credit, then open a secured credit card. A secured credit card requires you to make an initial deposit into an account the card issuer uses as security. For example, you deposit $250 into an account and the issuer approves you for a card with a $250 credit limit. The deposit is not used to make the monthly payments. Pay on time. Your payments will appear on your credit report and start building a positive history.

The ideal is to have three or more open, active accounts appear on your report. Add a variety of accounts as your credit improves. The more you improve your score the more offers to open new accounts will come to you.

Bills Action Plan

Understanding the ways your credit scores are computed helps you make good decisions on how to manage your debt. Here are four quick tips:

  1. Get a copy of your credit reports from
  2. Dispute inaccurate information.
  3. Lower your credit utilization — don’t max-out your credit cards
  4. Diversify your mixture of credit account types
  5. Keep your oldest accounts active


SSteve, Jun, 2013
If VantageScore scores more people than FICO, and includes one more variable in its scoring, which to me might make it a more reliable predictor of default, why don't more lenders use it?
BBill, Jun, 2013
We do not know if VantageScore or FICO offer more reliable predictions than each other or the proprietary scores offered by the three CRAs. No company in this field publishes an accuracy scorecard, so the public has no way of knowing if the credit scores deliver what they promise.

Presumably, Fannie Mae and Freddie Mac, who buy 90% of US mortgages today and require FICO scores, and banks that use credit scores when deciding whether to issue credit cards, find some value in knowing an applicant's credit score.

There is more we do not know about credit scores than we do, so your point is taken.