FICO vs. VantageScore: Why it pays to know the difference

4 min read
difference between FICO and VantageScore

When you’re shopping for a business loan there’s one detail you shouldn’t overlook: your personal credit score, especially if you’re checking a different credit scoring model than the lender uses. 

There are lots of credit scoring models and industry-specific scores used by lenders to assess creditworthiness. 

FICO and VantageScore are two of the most widely used ones. 

Let’s take a look at the differences between FICO and VantageScore and how each can impact your loan approval. While most lenders choose FICO scores, there are also many that choose VantageScore. 

What are FICO and VantageScore? 

The two scoring models gather data differently. FICO offers a credit score tied to each of the three credit reports (from Equifax, Experian, and TransUnion). If your information varies on each report, those scores may be different. On the other hand, VantageScore combines the data from the three credit files into one score. 

What most credit scores look at 

Most credit scores cover these basics, pulled from the data in your credit reports: 

  • Payment history (about 35% of the score)
  • Credit utilization (about 30%)
  • Length of credit history (about 15%)
  • Account mix (about 10%)
  • Credit inquiries (about 10%)

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What do the credit score ranges mean? 

Many credit scores today, including the base FICO credit scores and VantageScore 3.0 and 4.0, have a range of 300-850. Each lender has its own criteria for what it considers to be “good,” and it can also vary by credit scoring model. But here’s a general breakdown for scores ranging from 300-850, according to Equifax and Experian. 

  • 800-850 – Exceptional
  • 740-799 – Very good
  • 670-739 – Good
  • 580-669 – Fair
  • 300-579 – Poor

Some consumer scores don’t follow the 300-850 range, and you’ll likely see a very different number from a lender’s stated minimum FICO score if you check any of these. 

  • VantageScore 2.0 and earlier: 501–990
  • Experian credit score: 330-830
  • Equifax credit score: 280–850

Why your FICO score and VantageScore look different

Even if you’re checking the FICO and VantageScore models that follow the 300-850 range, each model has variations that make it difficult to compare apples to apples between the two. 

Late payments

  • FICO – Weighs late payments from all types of credit equally.
  • VantageScore – Places heavier penalties against late mortgage payments than with other types of credit. If you have a late mortgage payment, your FICO score might be higher than your VantageScore.

Credit inquiries

  • FICO – Counts multiple inquiries for rate-shopping for a mortgage, auto loan, or student loan as one inquiry within a 45-day period.
  • VantageScore – Counts multiple inquiries by utility companies, or for a mortgage or auto loan, as one inquiry within a 14-day period.

Collections

  • FICO – Ignores collections under $100; newest score version ignores paid collections.
  • VantageScore – Ignores paid collections and medical debt less than 6 months old. 

Which score should you check?

Checking your FICO score and VantageScore is vital to knowing where you stand no matter which one a lender uses. When you apply for a loan, just be sure you use the same scoring model the lender checks. For example, QuickBooks Capital uses a minimum FICO score of 620 but if you’re comparing it to a 620 VantageScore—it’s not the same scoring model and could cost you the loan. 

Getting to know how credit works and building on your good history is part of a healthy financial strategy for any small business owner. Having strong credit can get you access to the capital you need, at lower rates, to create the absolute best version of your business.


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Sources:

Myfico.com: FICO® score versionsWhat are inquiries and how do they affect my FICO score?

VantageScore.com: How the scores rangeWho uses our modelScore Impacts WhitepaperIntroducing VantageScore 4.0 

Experian: Understanding credit scores

Equifax: Equifax Credit Score™ ranges


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