Differences Between Vantage Score & FICO Score

In 2006, the three major U.S. credit bureaus, Equifax, TransUnion and Experian, created the VantageScore in order to eventually replace the Fair Isaac Corporation, or FICO, score with more modern algorithms. Both scores use different calculations in order to determine the creditworthiness of a consumer and both have different ranges of scoring. As of March 2011, borrowers can purchase both FICO and Vantage scores by visiting the website of one of the three major credit bureaus.

Calculation

The three major credit bureaus calculate a consumer's FICO score based on payment history (35 percent), amounts owed (30 percent), length of credit history (15 percent), new credit lines (10 percent) and types of credit lines used (10 percent), according to myFICO. The credit bureaus base the VantageScore on payment history (32 percent), credit utilization (23 percent), balances (15 percent), depth of credit history (13 percent), recent credit (10 percent) and available credit (7 percent).

Scoring

According to Debt to Income, FICO scores range from a low of 300 to a high of 850. Vantage credit score ratings run from a low of 501 to a maximum of 990. In addition, VantageScore assigns a letter grade to borrowers that ranges from F (terrible) to A (best). For example, a B Vantage Score runs from 801 to 900, while an F score ranges from 501 to 600. Lenders consider persons with a FICO score above 750 and a Vantage Score above 900 as the best type of borrower according to Debt to Income.

Cost

As of March 2011, consumers will have to pay $15.95 to obtain a single FICO score from Equifax and TransUnion. Experian no longer offers FICO scores to the public. Consumers can obtain a VantageScore at the lower price of $7.95 per credit bureau. Individuals can obtain their credit score by applying online or by telephone,in which case they will receive their score in the mail. Consumers may want to receive their scores from all three credit bureaus as scores can vary slightly depending upon the bureau.

Considerations

FICO scores offer lenders a better track record of a consumer's credit history because these scores rely upon more established credit information. However, the downside, according to VantageScore, is that between 34 and 50 million adults in the United States have little or no credit history, resulting in these individuals having either no FICO score (unscorable) or an inaccurate FICO score.

A VantageScore allows lenders to profile consumers with a thin credit history, such as immigrants, young adults starting their careers and people who rarely use banks and lines of credit. However, having been created in March 2006, the algorithms for the Vantage score are based on consumer data from 2003 to 2005 and, consequently, they currently only reflect more recent borrowing behavior.