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FICO vs VantageScore: Which credit score is best?

Summary

  • There are many different credit scoring models that lenders use for different purposes, including FICO and VantageScore.
  • Despite being different models, each of these different credit scores are all based on the same five factors: payment history, credit utilization, credit age, credit mix, and credit inquiries.
  • You can use the VantageScore® 3.0 score shown in your Credit Sesame account as a benchmark to measure whether your score is going up (improving) or going down (getting worse). It’s likely that improvement that you see in one credit scoring model could mean improvement in other scoring models.

 

It is a myth that there is only one credit score that lenders use to determine your eligibility and interest rates. We break down some of the most commonly-asked questions about credit score models and what you can do to make sure your credit score is on the right track. 

What is the best credit score model?

This is technically a trick question, because there are actually many different credit scoring models that are used for different purposes. You may have heard that lenders mostly use your FICO score, but even FICO has many different scoring models that could all generate a different score for you. Many of the different credit score models have industry-specific uses, like mortgage, credit cards or auto loans.

Because of this, the credit score you see on Credit Sesame may differ from the score a lender sees when you apply for credit. This is normal. 

What is the difference between VantageScore and FICO?

VantageScore® 3.0 is a credit score that was designed by the three credit bureaus as an alternative to other scores, such as FICO. According to VantageScore, this credit score model is used by more than 2,500 lenders and 20 of the top 25 financial institutions for various purposes.

The FICO Score was developed by FICO, a company that specializes in predictive analytics. Like your VantageScore, your FICO score is based on information in your credit report and is calculated as a three-digit score that ranges from 300 to 850.

FICO and VantageScore aren’t the only credit score models either. Each of the main credit bureaus (TransUnion, Equifax, Experian) also produce their own versions of a credit score.

Despite being different models, each of these different credit scores are all based on the same five factors:

  • Payment History: How much you pay is not a factor, as long as you pay at least the minimum amount due. Consistently paying on time will put you on the path to building a solid credit score in any of the models.
  • Credit Utilization: This refers to how much of your total available credit you are using. So if your credit limit is $1000 and you have a balance of $500, your utilization is 50%. The lower your credit utilization, the higher your credit score. We suggest keeping this number lower than 30%, and ideally below 10%. 
  • Credit Age: This refers to the average age of your open accounts. Potential lenders like to see a long-standing and responsible use of credit.
  • Credit Mix: Lenders like to see that you can handle different types of credit. This can include credit cards, auto loans, a mortgage, etc. 
  • Credit Inquiries: Hard inquiries occur when a lender checks your credit report in response to your request for a loan or a new credit card. We recommend only applying for a credit card or loan if necessary, since this can negatively affect your score. 

How does Credit Sesame calculate your credit score?

At Credit Sesame, we want to empower you with the knowledge you need to improve your credit score. The credit score you see on Credit Sesame is based on the VantageScore® 3.0 scoring model and provided by TransUnion, but when you upgrade to our premium services, we show your score from all three credit bureaus (along with many other resources to help protect your credit).

What can you do to help prepare your credit score for lenders?

Because there are so many different credit scores and because you typically do not know which scoring model a lender is going to use, you can use the VantageScore® 3.0 score shown in your Credit Sesame account as a benchmark to measure whether your score is going up (improving) or going down (getting worse).

It’s likely that improvement that you see in one credit scoring model could mean improvement in other scoring models because almost all scoring models look at the same five aspects of your credit. So focus on how you are doing on each of those aspects, not just the number itself. 

If you have access to a free credit score from other sources, like your bank or credit card issuer, we encourage you to keep an eye on those, in addition to the free credit score from Credit Sesame. This can help give you an idea of the range in your credit score depending on the different models used. 

Keeping tabs on your credit score and credit report card can tell you whether your credit profile is improving, what general range you fall into, and even if you’ve become the victim of fraud or credit reporting errors when your score unexpectedly falls.

 

This content is for informational purposes only and should not be relied on as financial advice. 

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Published January 26, 2021 Updated: January 28, 2021
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Marilyn m Lucik•  January 28, 2021 Edit
You always provide very useful information regarding how credit scores are determined I appreciate all of your info I have 160,000 in student loans and I am 68. Got my masters at age 62 hoping to get a better job at Firestone but instead they sent our jobs to Costa Rica and I got laid off. So student loan forgiveness of any kind is welcome but in my case I do not se it helping. I continually get refused for loans or new cards to try to improve my credit score and I know the student loans is the problem.
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