In the world of credit scores, there are two main credit scores: VantageScore and FICO Score. Both of these credit scores are widely used, but each for completely different reasons.
Let's jump into the key differences so you can best understand your current credit situation.
The key difference between FICO and VantageScore
FICO and VantageScore are competing products, both developed by different companies to offer consumers and lenders a picture of lending reliability.
FICO is developed by the company Fair Isaac Corporation and launched in 1989, and is today used primarily by lenders to evaluate your trustworthiness as someone looking to borrow money or open a line of credit.
VantageScore, on the other hand, was a joint development between the 3 credit bureaus: Experian, Equifax, and TransUnion in 2006, mainly to compete with the now standard FICO score.
VantageScore is much more accessible, and thus has become the standard credit score for situations like using credit monitoring/building apps, checking your own score frequently, etc. It's not used as often as FICO when lenders directly check your credit, but is still used nonetheless.
How FICO and VantageScore are calculated
Since they were developed by different ventures, both FICO and VantageScore use slightly different calculations to determine your score.
When it comes to understranding the breakdown of how credit scores are calculated, it's important to learn the 5 factors: payment history, credit utilization, length of credit history, credit mix, and new credit inquiries.
These factors are weighed together to determine your credit score. However, the weight that each of these 5 factors is assigned is what varies between FICO and VantageScore.
Here's a breakdown of how those credit factors go into both FICO and VantageScore:
Why VantageScore is easier to qualify for
Accessibility is a key difference between FICO and VantageScore as well.
With FICO scores, you need at least one tradeline that's at least 6 months old. Examples include credit cards, loans, etc.
For VantageScore, you still need at least one tradeline, but the age of the tradeline doesn't matter. Additionally, VantageScores can be calculated in as little as one month, which compared to FICO is extremely fast.
Conclusion
While FICO and VantageScore may end up being approximately similar in the end, there are key differences that are important to understand so you get a clear and accurate picture of your credit profile.
If you're looking to build up your FICO and VantageScore, Kikoff offers credit-building credit accounts for as little as $5 per month.
Click here to learn more.
Frequently Asked Questions
About the editor
