FICO score vs. credit score.  Do you know the difference? Well, a FICO score is only of credit score amongst others that can be assigned to you and there are differences between them.  It is important to know this information since you will be applying for credit at various points in your life and you want to know what a FICO score vs. credit score means.

What are the differences between FICO score vs. Credit score

FICO score vs. Credit score

What is a FICO score?

FICO stands for Fair Isaac Corporation. Currently, it is the most used type of credit score.  They have a proprietary formula that they use to calculate the score.  It is based on these factors:

  • Payment history
  • Credit mix
  • Outstanding balances
  • New credit
  • Age of credit

Each of these factors is assigned a percentage that ultimately impacts your FICO score:

  • Payment history – This makes up 35% of your FICO score. So, make sure you are paying those bills on time, every time.  Even one missed payment that goes over 30 days late can negatively affect your score.  In addition, things like bankruptcies and foreclosures will stay on your report for up to 10 years.
  • Outstanding balances – This makes up 30% of your score.  Having outstanding debt is not horrible if you are making timely payments.  It can actually boost your score some.  With that being said, lenders can become worried if they think you have more debt than you can handle.
  • Length of credit history– This makes up 15%.  You may think it makes sense to close an account you have paid off but hold off.  If it is in good standing, leave it.
  • Credit mix – This makes up 10%.  Lenders want to see a nice mix of credit types. So credit cards, mortgage, loans etc.
  • New credit- Another 10%.  Credit cards are good for your score if you know how to properly use them. You just want to avoid opening a bunch of credit cards within a short time period as this gives off a signal that you may be in a negative financial situation.

What are the ranges for the FICO score?

The range is from 300 to 850 and here is how that breaks down:

  • Excellent: 800 and above.
  • Very good: 740- 799
  • Good: 670 -739
  • Fair: 580 – 669
  • Poor: below 579

An excellent credit score will get you the best rates when it comes to terms from lenders.  A very good score will still get you better rates then a good score.  A poor score of course means that rates won’t be as favorable and you may need to secure a loan with a deposit or by paying associated fees.

In addition, there are different FICO score models for the various types of credit.  So for care loans there is a specific scoring model used.  Moreover, you will notice differences in the FICO scores provided by Equifax, Experian, and TransUnion.  This is because each bureau collects slightly different data.

What is a Credit Score or VantageScore

The other popular credit score floating around is the VantageScore.  This was created by the three major credit bureaus: Equifax, Experian, and TransUnion. They use the same ranges as the FICO score but can generate a score with just one month of credit history.  This is beneficial for those people that are just starting to get some credit under their belt. In addition, they use a different formula for calculating their scores.  Here is what goes into a VantageScore in order of importance:

  • Credit usage, balance, and available credit
  • Credit mix
  • Payment history
  • Age of credit
  • New credit

Each of these factors also have their own percentage that helps determine your VantageScore:

  • Payment history makes up 40%
  • Credit mix makes up 21%
  • Credit usage makes up 20%
  • Outstanding balances makes up 11%
  • New credit makes up 5%
  • Available credit makes up 3%

What are the ranges for a VantageScore?

  • Excellent: 800 and above.
  • Good: 670 -739
  • Fair: 580 – 669
  • Poor: below 579

When it comes down to knowing your FICO score vs. credit score (aka VantageScore), knowing either will suffice.  With that being said, VantageScore and FICO scores are not always the same.  They can vary because of the differences in the models. As long as you are paying attention to your score under either model,  you will know more or less where you stand. Just remember that the most important thing to prioritize when it comes to your credit are those on time payments.  Payment history is the most important factor in both models.