What’s the Difference Between FICO and VantageScore Credit Scores?

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Welcome to the “2-Minute Money Manager,” a short video feature answering money questions submitted by readers and viewers.

Today’s question is about credit scores; specifically, the difference between two popular scores, FICO and VantageScore.

Watch the following video, and you’ll pick up some valuable info. Or, if you prefer, scroll down to read the full transcript and find out what I said.

You also can learn how to send in a question of your own below.

For more information, check out “7 Quick Ways to Raise Your Credit Score” and “How I Got a Perfect Credit Score in 4 Steps.” You can also go to the search at the top of this page, put in the words “credit score” and find plenty of information on just about everything relating to this topic.

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Got a question of your own to ask? Scroll down past the transcript.

Don’t want to watch? Here’s what I said in the video

Hello, and welcome to your “2-Minute Money Manager.” I’m your host, Stacy Johnson, and this answer is brought to you by Money Talks News, serving up the best in personal finance news and advice since 1991.

Today’s question comes from John:

“What is the difference between the FICO score and VantageScore?”

OK, John, let’s discuss.

The history of credit scores

Imagine a world in which every time you applied for credit, someone with expertise had to personally go through your entire credit history and make a subjective judgment about whether you deserve a car loan or credit card.

Cumbersome, huh?

Well, that’s the way the credit world worked until the 1950s. That’s when a couple of guys, Bill Fair and Earl Isaac, came up with a new idea: Use an automated formula to distill all that credit information into a single, simple number. Voila! Now, you don’t need expertise or experience to determine credit worthiness. Run the formula, and a chimpanzee can grant credit.

Bill and Earl took their idea, created a company called Fair Isaac, and started selling their new system, called FICO scoring, to lenders. It took a couple of decades to gain widespread acceptance, but eventually their credit score simplified the business of lending.

And their patience was richly rewarded, because they created a near monopoly on credit scoring. Even today, FICO clients include 95 of the 100 largest financial institutions in the U.S., and all the 100 largest U.S. credit card issuers. Annual revenue for Fair Isaac in 2019 was well over $1 billion.


OK, now that we’ve learned a bit about where credit scores originated, let’s get back to John’s question; namely, what’s the difference between FICO and VantageScore?

Now that you understand how lucrative credit scoring is, it should come as no surprise that other companies want in on the action. In 2006, the three major credit-reporting agencies — Equifax, Experian and TransUnion — got together and launched the VantageScore. They began providing their new score to websites like Credit Karma, Credit Sesame and NerdWallet, and those sites began giving it away free to attract subscribers.

So, what’s the difference between these scores? They measure the same thing: your ability to repay a loan. And they do it in essentially the same way; by examining things like your payment history, level of debt, the type of credit you have and how much of it you’re using. Both of their most recent models yield a range from a low of 300 to a perfect 850.

But there is one major difference: The FICO score is used by way more lenders than any other score. Despite the fact that VantageScore has now been around for a while, the FICO score is still by far the most widely used credit score. So, if you want to see the score that your lender is most likely to actually use, you want to see your FICO score.

Free credit scores

As I mentioned, it’s easy to get a free VantageScore by going to any number of websites. In the past, free FICO scores were much harder to find. The law does require lenders to furnish a FICO score if you’re turned down for credit, or in certain other situations. But until relatively recently, if you wanted to see your FICO score, you had to pay for it.

These days, however, finding a free FICO score is simple. Lots of banks and credit card companies offer them free — sometimes even when you’re not a customer. I can look at mine free every month from at least three sources: the two credit card companies I use, along with my bank. If you can’t find a free FICO score, go to Money Talks News and do a search for “Free FICO Score.” We’ll hook you up.

Bottom line, John? While there are subtle differences between FICO and VantageScore credit scores, the real difference is that the FICO score is the one most lenders use. Just keeping an eye on your credit? The VantageScore is fine. But if you’re about to borrow big, I’d recommend tracking your FICO score.

Hope that answers your question, John. Now, what about you? Got a question of your own to ask? Then do what John did: Simply hit “reply” to any Money Talks email newsletters and fire away. I can’t answer every question, but I do my best.

And if you’re not getting our newsletter? Fix that right now by going to Money Talks News and subscribing. It’s free, takes five seconds and will absolutely, positively make you richer.

I’m Stacy Johnson. See you here next time!

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The questions I’m likeliest to answer are those that come from our members. You can learn how to become one here. Also, questions should be of interest to other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA, and I’ve also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

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