FICO vs. VantageScore

If you've ever applied for a credit card, mortgage or car loan, chances are the decision was probably based on a FICO score, the model most widely used by lenders for decades. VantageScore now aims to change that by introducing an alternative. But are the two scores different? And, most importantly, should this alternative matter to you, the credit consumer?

FICO

FICO is a credit scoring model originally developed in the 1950s by Fair, Isaac and Company to help lenders assess and predict your creditworthiness. FICO isn't a credit reporting agency: Instead, the company provides software that applies mathematical formulas to the data in your credit file to calculate your score. FICO produces several different scoring models to help lenders assess a variety of risks, ranging from your capacity to assume a mortgage or other debt to how likely you are to file bankruptcy.

VantageScore

VantageScore is a relatively new entrant into the consumer credit-scoring market. The company was established in 2006 as a joint venture by the three major credit reporting agencies to develop a scoring model to compete with FICO. Prior to VantageScore, if you requested your credit score from each of the three reporting agencies, it wasn't uncommon to receive three different scores because of variations in the contents on file with each bureau. According to the company, VantageScore applies an identical scoring model at all three agencies, thus reducing score variability due to differences in your files' contents and, therefore, providing a more accurate depiction of your creditworthiness. VantageScore is marketed and sold by all three bureaus through individual licensing arrangements.

Scoring

FICO scores range from 300 to 850 and weigh five categories of data in your credit file as follows: payment history (35 percent), amounts owed (30 percent), length of credit history (15 percent), new credit (10 percent) and types of credit used (10 percent).

VantageScore scores range from 501 to 990 and weigh six categories of data: payment history (28 percent), utilization (23 percent), balances (9 percent), depth of credit (8 percent), recent credit (30 percent) and available credit (1 percent). Additionally, VantageScore assigns one of five grades to each range of scores: "A --- Super Prime" (901-990); "B --- Prime Plus" (801-900); "C --- Prime" (701-800); "D --- Non-Prime" (601-700); and "F --- High Risk" (501-600).

Other Comparisons

Both VantageScore and FICO assess your previous credit history and attempt to predict your future credit risk over an ensuing two-year time period. Both have the capacity to render scores, even if you have a "thin" credit file, meaning if your credit history is limited or you don't use credit consistently --- both of which can be important factors in your credit score. VantageScore states that its model doesn't penalize thin files to the extent that FICO does. You should note, however, that this statement originates from VantageScore and, therefore, may or may not be subjective. Despite the similarities, FICO's scoring model continues to be more compatible with the automated underwriting systems currently used by many lenders, as well as by government-sponsored enterprises such as Fannie Mae and Freddie Mac.

Considerations

It may prove difficult for you to conduct an accurate comparison of your FICO score versus your VantageScore because their rating scales differ. Additionally, all three major credit reporting bureaus continue to use FICO's scoring model to render some of their individual credit scores. This could potentially cause confusion if you request your credit score from any one agency versus specifically requesting your VantageScore.