At a Glance

While the terms “FICO score” and “credit score” are often used interchangeably, they are not the same thing. A FICO score is just one type of credit score. You actually have many credit scores across different credit bureaus and credit products. This article will cover:

Why do I have different scores from different credit bureaus?

FICO and other credit bureaus all use different mathematical algorithms and criteria to determine their scores. In addition, not all lenders send reports to the same credit bureaus. If you pay a credit card bill late, and that credit card company only sends its report to one bureau, your score would be lowered on just that bureau’s credit report.

Why are FICO and other credit scores important?

When you apply for a loan, such as a mortgage or auto loan, the lender examines your credit score to assess risk and determine how likely you’ll be able to repay your loan. Credit scores allow lenders to quickly make decisions based on data that is both impartial and consistent, and reduces their chance of losing money to unreliable borrowers.

Borrowers with good credit scores are rewarded with access to loans and favorable interest rates. Borrowers with bad credit scores are often unable to get a loan or receive loans with high interest rates.

FICO overview

FICO stands for Fair Isaac Corporation, which was the first company to ever create a credit score. The FICO score launched in 1989 and is the most widely used credit scoring metric.

There are dozens of FICO score models that fall under two main categories: base scores and industry-specific scores. Industry-specific scores are tailored to certain credit products, like mortgages or auto loans.

FICO scores also vary according to their updates, with the newest version being FICO Score 9 (released in 2016).

How a FICO score is calculated

To calculate your creditworthiness, FICO uses five different factors:

FICO Scores are calculated using these five metrics from your credit report


VantageScore overview

In 2006, the three major credit bureaus (Experian, Equifax, and TransUnion) created VantageScore, the next most popular credit calculation to FICO. Both determine your score using similar factors.

However, the main difference between VantageScore and FICO is that VantageScore is calculated using just one month of credit, while a FICO score requires six months or more of credit. So, if you have a shorter credit history, your VantageScore may be higher than your FICO score.

How a VantageScore is calculated

VantageScore evalulates your credit score based on the following:

According to the VantageScore 4.0 your credit score is calculate based on these six factors


FICO and VantageScore ranges

FICO and VantageScore use the same scoring ranges. Credit users are assigned a three-digit score that ranges from 300 to 850. A good FICO score is 720 to 740, with an exceptional score being 800 or over. A good VantageScore is 660, with an exceptional score being 780 or over.

What isn’t included

Factors that aren’t included in either scoring model are:

  • Income
  • Age
  • Credit counseling participation
  • Employment history
  • Marital status

Other credit scoring models

Each of the three main credit bureaus have their own scoring models. They are considered educational scores since lenders don’t normally use them to make lending decisions.

Some lenders also have their own custom scoring models, and as sales incentives, often bundle credit scores with other offerings like credit report monitoring services.

How to improve your credit score

Here are some different steps you can take to improve your credit score:

  • Avoid late payments: Your payment history is the biggest factor taken into account with almost every credit score.
  • Don’t close out old accounts: Don’t close out old accounts once you’ve paid your balance off. While this might seem counter-intuitive, closing accounts will raise your credit utilization rate and lower your overall score.
  • Check your credit report frequently: Your credit scores are all based on your credit report. Make sure to check your report for errors frequently.
  • Ask for a higher credit limit: A higher credit limit will improve your score by lowering your credit utilization rate.