Credit Scores: FICO or VantageScore?

Credit Scores: FICO or VantageScore?
February 15, 2016 Prosperity Connection

FICO and Vantage score logos side-by-side


We all know that having a good credit score is crucial. But many people do not realize that there is more than one type of credit score.

When a person applies for a car or a home loan with a lender, the credit score the lender is most likely to use is the FICO score.  When a person goes online, receives a credit score from their credit card company, or receives a credit score from a consumer credit monitoring service like Credit Karma most likely they are receiving a VantageScore.  So the questions at hand are, ‘what is the difference between the FICO and the VantageScore?’ and ‘why are my scores different?’

Trivia Question– What does FICO stand for?

FICO is short for “Fair Isaac Corporation”.  A few years ago the company officially changed its name to “FICO”.  Now that we know who FICO is, let us continue.

 Similarities between FICO and VantageScores:

Both the FICO and the Vantage Score use a scoring system that ranges from 300 to 850.  Scores are based on the following components: Payment History, Credit History, Credit Used, New credit, and Mix of Credit Accounts.

 Differences between FICO and VantageScore:

The FICO is implemented as a standard credit assessment tool by 90% of all financial institutions. A person needs at least 6 months of credit history and at least one active line of credit listed on their credit report in order for FICO to generate an individual’s score. FICO scores do not include any debt with balances below $100.00.

In addition to the numeric score, the VantageScore also incorporates a letter grade from “A” to “F” with an “A” being good credit.  To generate a credit score, the VantageScore only requires one month of credit history and one account reporting to the credit bureaus for at least two years.

Late Payments:

While both The FICO and the Vantage scores look at accounts with a history of late payments in similar ways, FICO treats all late payments the same regardless of the type of account while VantageScore “penalizes” late mortgage payments more than it does other types of credit. As a result, if you’re late on your mortgage, that late payment may more seriously impact your VantageScore than your FICO score.

How Inquiries Are Counted:

While hard credit inquiries impact both FICO and Vantage scores only minimally, each scoring model offers consumers a benefit not provided by the other when multiple inquiries appear on a credit report for a single type of credit transaction.  While both treat multiple inquiries posted within a focused period of time as a single inquiry, FICO uses a 45-day time span for consumers to shop for rates while Vantage only allows 14 days.  The Vantage Score also applies special treatment across all types of credit (cards, autos, etc.) while FICO only applies it to mortgage, auto, and student loans.  Inquiries do not have a major scoring impact but understanding that multiple inquiries are counted can be important.

The Take Away:

You should always know where your credit score stands no matter what the scoring system.  Paying your bills on time, keeping your credit balances low, checking your credit report at least once a year, and only applying for credit when needed are best practices to maintaining a good credit score.  So, YES!!!  Open up that Credit Karma account (or another reputable credit monitoring service) and track your credit score with the credit tracker your credit card offers, but remember to read the fine print and ask what credit score this service is providing.  Remember that this service it is a tool and like all tools, it’s there to help inform and enhance your financial situation while acting as a point of reference.  Don’t forget, you can always schedule a one-on-one coaching session to go over your credit report and better understand it’s effect on your financial pathway.


By Evette Baker, Financial Education Specialist, Prosperity Connection