Credit Scores vs. FICO VantageScores: The Differences Explained

Learn About Credit ScoreIn the not-so-distant past, how lenders determined your creditworthiness was shrouded in mystery. Even with the majority of the veil now pulled aside, it's probably reasonable to assume that a fair number of consumers receive no formal or informal education on the finer points of personal finance. Money management is generally something you learn as you grow through life. In your teen years, you establish bank accounts. Then you buy a car. Then you buy a home. Along that path, you learn the general mechanics of credit and how it works. But do you know the difference between a credit score, a FICO score and a VantageScore and how lenders use those numbers?

Credit Score Defined

A credit score is a number arrived at in a variety of methodologies and formulas that allows lenders to assess you as a credit risk. Even today there is no particular recognized standard in credit scoring. A FICO score is a credit score. A VantageScore is a credit score. Lenders might also have their own method for determining credit scores.

Why is your credit score so important? Your credit score is with you for life. The higher your credit score, the lower you are as a credit risk. This affects whether you can borrow money, how much you can borrow, the terms of a loan and how much it will cost you in finance charges.

FICO Score Defined

Fair Isaac Corporation (FICO) was founded in 1956. They created the FICO score as a means to evaluate creditworthiness. Prior to 1956 and until the 1980s, lenders used their personal judgment in determining who was able to borrow money. FICO developed the first credit scoring system generated on a score between 300 and 850 based on credit history and sold the credit scores to lenders. It proved to be a lucrative venture.

In the 1980s, FICO built custom software to automate the process. At that point, the three main credit reporting agencies (Equifax, TransUnion and Experian) adopted the FICO score as a loose standard. Due most likely to its longevity, the FICO score still holds its place as the dominant credit scoring agency.

VantageScore Defined

The "Big 3" credit reporting agencies, Equifax, TransUnion and Experian, eventually got together and decided that it was time that FICO share the wealth. With the market now open to making credit scores available to consumers as well as lenders, the credit bureaus wanted their slice of the pie. They began marketing VantageScore in 2006. VantageScore is also based on a range of numbers, although those numbers differ somewhat from FICO in that the range is from 502 to 999.

The War for Credit Scores

FICO filed antitrust, false advertising and breach of contract claims against the Big 3 in 2006 to prevent VantageScore from the use of the range of numbers that overlapped with the FICO scoring system. After a four-year court battle, a jury rendered a verdict that a credit score range could not be trademarked. In July 2010, a U.S. District Court Judge dismissed all of FICO's legal claims, thereby ending the litigation.

The Aftermath for Consumer Lending

It might appear that the outcome of the litigation between FICO and the credit bureaus only complicated matters. However, that is not the case. Request your FICO score and your VantageScore. If you need to borrow money, your best bet is to simply research your lender options. If your FICO score is stronger, look for a lender that uses FICO credit scoring. If your VantageScore is stronger, seek out a lender that uses the VantageScore credit score range. And don't forget to take into account that some lenders use their own credit score. The effort you expend in collecting the information on your credit scores and researching lenders will pay off in better loan terms and lower interest rates for you.


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