FICO Scores vs Credit Scores   

Whether you’re a credit expert or just starting out, it’s important to know that all FICO scores are credit scores, but not all credit scores are FICO scores. Understanding the differences between FICO credit scores and other credit scores can help you better navigate the world of loans and credit cards.

 
Still, it’s important to keep in mind that FICO scores typically matter most. FICO credit scores have been around since 1989 and are what the majority of lenders and businesses use to help them determine the amount of financial risk associated with any individual. 

Lenders who check your credit score usually look at a FICO score, so in many cases your FICO score and your credit score are one and the same. But every credit score needs data from your credit report to make its calculations, and there are three different nationwide credit-reporting agencies – and so at least three different FICO scores. What’s more, FICO has multiple versions used for different purposes, as well as one major competitor in the credit score modeling world. FICO’s multiple versions include:¹

• FICO Score 8, the most widely used version, although FICO Score 9 and 10 are available.
• Multiple versions of FICO Bankcard Score are typically used when you apply for a credit card.
• Multiple versions of FICO Auto Score are typically used when you apply for an auto loan.
• And older versions of FICO’s main scoring model are used in mortgage lending, where FICO is dominant because lenders generally follow rules laid down by Fannie Mae and Freddie Mac, two mortgage-backing agencies that are themselves backed by the federal government. Both Fannie and Freddie insist that lenders use FICO credit scores when evaluating the creditworthiness of a mortgage applicant.

Considering all these versions, and multiplying them by the three credit reporting bureaus, gets you to a large number of potentially different credit scores. It’s worth remembering, though, that the differences from score to score are usually very small.

FICO’s main competition is the VantageScore system, which was rolled out in 2006. The VantageScore system is a joint project from the three credit bureaus: Equifax, Experian, and TransUnion. If you have heard that Equifax also has its own proprietary credit score, that’s true – but it’s considered only “educational.” Lenders don’t check that score when evaluating applications.

All credit scores, regardless of who is doing the calculating, are based on information in your file at the credit bureaus. Both FICO and VantageScore use a three-digit scoring system that ranges from 300 to 850. For more, see “What Is a Credit Report and Why Is It Important?”

From 30,000 feet, both FICO and VantageScore focus on the same key elements to assess whether you’re a good or bad credit risk:

• On-time bill payment.
• How much you use of your available credit.
• How long you’ve used credit.
• The different types of credit you use.
• New credit applications.

But when you take a closer look, there are slight differences in how the two types of scores are generated:

• The specific algorithm used to calculate your score can vary. FICO customizes the algorithm it uses to calculate a score for each of the three credit bureaus, due to differences in their data structures. VantageScore uses the same algorithm regardless of which credit bureau’s data it is using.
• Specific factors have different weightings. Both scoring systems break your score into the five broad elements bulleted above. FICO explicitly shares how much each slice is weighted. VantageScore offers more general explanations, such as “extremely influential” or “less influential.” “What Is a Credit Score?” has a deep dive into the specifics.
• Range cutoffs aren’t uniform. While both systems use the same 300-to-850 scoring scale, they sort the scores into broad buckets a bit differently, as shown in the accompanying table.
• “Newbies” are treated differently. FICO only calculates its scores once you have a loan or credit card account for six months, and you must have at least one account that has been “active” in the past six months. That means you’ve made a payment. You can get a VantageScore even if you only have one loan or credit account and it’s less than six months old.
• Different windows for combining hard inquiries. Whenever you apply for a loan, a new credit card, or a credit limit increase, the lender usually makes a “hard inquiry” on your credit report. A single hard inquiry can have a small negative impact on your credit score, typically less than five points. But if you have multiple hard inquiries, those small dings can begin to add up. To help people comparison shop, both FICO and VantageScore combine similar inquiries – say you’re shopping for a car loan – and treat them as one inquiry. FICO gives you up to 45 days to do your comparison shopping and be hit with only one hard inquiry. VantageScore limits the window to 14 days.

Credit Score Range Chart

Because FICO and VantageScore have different approaches to how they calculate their scores, it’s not uncommon for their scores to be different. Typically, the differences shouldn’t be much. It’s a good practice to focus on the main factors that influence all credit scores: paying bills on time and using less than 30% of your total available credit.

Keep in mind that when you’re web surfing and see an offer for a free credit score, it often will be a version of VantageScore. But if you apply for a loan or new credit card, it’s likely one or more of your FICO scores will be checked. In that case, it’s good to know your FICO score because it will likely help determine the annual percentage rate (APR) you’ll be offered, for example, on a new credit card. To qualify for the lowest APR, you’ll want to do everything you can to improve your FICO credit score.

The good news is that most major banks and credit card issuers, including American Express, offer free FICO scores to their customers. Log in to an account and chances are good you will see a link to get a free FICO credit score.

While you can take out a loan to pay off credit card debt, it’s not a simple choice. You’ll want to analyze a multitude of options from many financial services companies, because which option works best for you will depend on several factors. Whether you’re considering a secured or unsecured personal loan or transferring your balance to another card, fees and interest rates can come as a surprise. Finally, you’ll likely need a plan in order to succeed.

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