When you check your credit score on websites that provide your free credit score, do you know which credit score you’re looking at?  We actually have numerous credit scores, generated from two competing companies: FICO and VantageScore.  And among these, there are several versions, as they make upgrades to their scoring systems.

With the recent versions of VantageScore, they now both use the same scoring range of 300 to 850, and they both look at the same factors. While both companies score us based on how creditworthy we are, the scores are composed somewhat differently.

FICO’s scoring calculation (Equifax, n.d.):

• Payment history (35%)
• Credit utilization (amount owed) (30%)
• Length of credit history (15%)
• Mix of credit accounts (10%)
• New credit accounts (10%)

VantageScore’s scoring calculation (Equifax, n.d.):

• Payment history (most influential)
• Credit utilization (percentage of credit limit used) (highly influential)
• Length of credit history and mix of accounts (highly influential)
• Amounts owed (somewhat influential)
• Recent financial behaviors (least influential)
• Available credit (least influential)

While both scores are important, the financial world will look at your FICO score 90 percent of the time to make a lending decision.

Sites like Credit Karma and Credit Sesame look at your VantageScore, and so you and a lender may be looking at two different scores when you apply for a credit card, car loan, or mortgage.  You may see a score of 700, which is considered very good on the VantageScore range, but that same score is considered good under FICO’s model (Forbes, 2021).

Payment history is the most important aspect in both of the scoring models.  Paying everything on time will raise both of your scores, as this tells creditors that you are financially responsible and less of a risk to miss payments.

Featured image by Moon Safari – stock.adobe.com

References:

Black, M. FICO Vs. VantageScore Credit Scores: What’s The Difference? (2021).  Retrieved from: https://www.forbes.com/advisor/credit-score/fico-vs-vantagescore-credit-scores-whats-the-difference/

Equifax. (n.d). Are Scores from FICO and VantageScore Different? Retrieved from: https://www.equifax.com/personal/education/credit/score/articles/-/learn/difference-between-fico-scores-vantagescore/

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