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FICO® Score vs. Credit Score: What’s the Difference?

TLDR

What You Need To Know

  • Credit scores usually range from 300 – 850, and contrary to popular belief, you don’t have just one. You probably have hundreds of credit scores
  • The FICO® Score was created by the Fair Isaac Corporation back in 1989 and has become the gold standard for credit scores
  • While there are other scores, 90% of “top lenders” use a FICO® Score in their lending decisions[1]

Contents

Without googling it, could you tell us what this means: My FICO® Score 8 from TransUnion® is 712, but my VantageScore® 3.0 from Experian™ is 820.

How’d you do?

If the math wasn’t mathin’ for you, that’s pretty common in the personal finance space. We learn a lot in school, but we either all ignored our teachers or skipped class the day they taught us about credit scores. That’s right: scores – with an S at the end.

Credit scores usually range from 300 – 850, and contrary to popular belief, you don’t have just one. You probably have hundreds of credit scores.

It can be challenging to figure out which scores matter most, how they’re different from each other and where to find these three-digit numbers that play such important roles in our financial lives.

And then there’s the big question: What’s the difference between FICO® Scores and credit scores. Are they the same thing? And if that’s a no, which one should we pay attention to?

What To Know About FICO® Scores vs. Credit Scores

Lenders use credit scores to evaluate your creditworthiness. Your scores can affect your ability to get approved for a credit card, mortgage or personal loan. Your scores also play a role in determining what interest rates you’re offered on credit products.

The higher your scores are, the more attractive you’ll appear to lenders. Then there’s the flip side. The lower your credit scores are, the less attractive you’ll appear to lenders.

You have different credit scores because your lenders report your credit history to any (or all) of the three major credit bureaus – Equifax®, Experian™ and TransUnion®. Each bureau might have different information about you in their credit reports, and credit scores are calculated using the data in an individual credit report.

Each report can generate different scores even when the same scoring model is used to calculate the score.

Different companies offer credit scoring models. You may have heard of one of them: the Fair Isaac Corporation (aka FICO®).

FICO® Credit Scores, Explained

A FICO® Score is a type or brand of credit score (and the same goes for VantageScore® credit scores).

You’ve probably heard of it because it’s the most widely used. The FICO® score was created by the Fair Isaac Corporation back in 1989 and has become the gold standard for credit scores.

Let’s put it this way, if credit scores were sneaker brands, FICO® would be Nike. While there are other scores, 90% of “top lenders” use a FICO® Score in their lending decisions.[1]

You also have more than one FICO® score. Lenders use different FICO® scoring models for different purposes. The FICO® score they would use for credit card applications would be different from the one they use for auto loans.

FICO® also regularly updates its scoring model. The most recent version is FICO® Score 10, though most lenders still use FICO® Score 8.

VantageScore® Credit Scores, Explained

If FICO® credit scores are Nike, VantageScore® credit scores are more akin to Keds (our apologies to any Keds fans among us).

The three major credit reporting agencies – Equifax®, Experian™ and TransUnion® – created VantageScore®. It’s only been around for about a decade – but it is growing in popularity.

It doesn’t take long to generate a VantageScore® credit score, which is an advantage for consumers. FICO® requires at least 6 months of data before generating a credit score. You can get a VantageScore® after just one month.

How To Check Your Credit Scores

So, do you know what your FICO® scores are and what they signal to lenders?

Here are the FICO® Score 8 ranges[2]:

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

While credit scores are based on your credit history, lenders typically base their decisions to approve (or not approve) a borrower on more than credit scores.

Check our lists to see where you can get your FICO® scores for free. You’ll also find websites where you can get other free credit scores, like your VantageScores®.

While you’re at it, you should probably check your credit reports. Your credit scores are based on the data in your credit report. If the data is wrong, your credit scores won’t be right.

You can get one free credit report from each credit reporting bureau every 12 months at AnnualCreditReport.com.

How Credit Scores Are Calculated

All credit scores, including FICO® Scores and VantageScore® credit scores, are based on similar credit scoring models. Your credit score will be calculated using your: 

  • Payment history
  • Amount owed 
  • Length of credit history
  • New credit
  • Credit mix (aka credit diversity)

Points are awarded based on the credit data in your credit report. The difference between FICO® and VantageScore® is that they each assign different weights to each category of credit data. 

For example, someone with no late payments could receive 200 points under the FICO® scoring model but receive 180 points under the VantageScore® scoring model.

Lenders also interpret and weigh FICO® and VantageScore® credit scores differently. A 660 FICO® score may be enough to qualify you for a credit card with one issuer, but another issuer may require a 680 VantageScore® to qualify.

How To Boost Your FICO® Score

If you’ve never used credit, your credit scores are likely nonexistent. If you struggled with debt in the past, your credit scores may be on the lower end. To build your credit from the ground up, you’ll need to demonstrate to lenders how responsible you can be with a credit card, a secured credit card or a credit builder loan.

Here are a few strategies you can deploy to improve your credit:

  • Make on-time payments: This personal finance principle is set in stone: Pay your bills on time and, ideally, in full. Late payments will damage your credit scores. Full stop. Consider setting up autopay for your bills to avoid late fees, mounting interest or even default.
  • Reduce your credit utilization ratio: You can do this by spending less, paying off a credit card, or even asking to raise the credit limit on your card(s). Congratulations are in order if you get a credit limit increase or pay off your high-interest cards. Just make sure your spending is under control. Otherwise, you might wind up in the same cycle of debt you just escaped.
  • Keep your credit cards open: Closing a card will increase your credit utilization and eventually decrease the age of your credit history. Both events will reduce your scores. Unless you’re paying an annual fee and not taking advantage of the card’s points and rewards, you may want to keep the card open – especially if you’re using it to repair or build your credit.

Why Credit Scores Matter

Credit scores affect all areas of your life.

A bad credit score can make it hard to rent an apartment, get an affordable mortgage or buy a car. Loan approval may prove challenging, and even if you qualify for loans, your interest rates will likely be higher than if your credit scores were good.

Bad credit scores make borrowing money more expensive. Let’s say you have a 640 credit score. You want to take out a 30-year mortgage for $100,000 and the lender offers you a 6% interest rate. By the time the loan is paid off, your total interest payment will be $125,000.

Now let’s give your credit scores a boost. Let’s say you want the same loan with a 720 credit score. In this case, the lender offers you a lower 4% interest rate. By the end of the loan, your total interest payment will be $40,000 less. 

Are you already thinking about what you could do with an extra $40,000 in your savings account?

Good credit scores open all kinds of doors. You’ll likely find it easier (and cheaper) to borrow money and qualify for better credit card offers.

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Determining Your Credit Score
  1. Your credit score is a three-digit number that’s used to predict how likely it is you’ll pay back money you borrowed.
  2. The score generally ranges from 300 (low) to 850 (excellent). It’s calculated by looking at your previous credit history.
  3. You can check your credit report to find the number or use a free credit tool. You can also plug in your best guess.

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  1. MyFICO®. “What is a Credit Score?” Retrieved July 2022 from https://www.myfico.com/credit-education/credit-scores

  2. MyFICO®. “What is a FICO Score and why is it important?” Retrieved July 2022 from https://blog.myfico.com/whats-a-good-credit-score-range

ICYMI

In Case You Missed It

  1. FICO® requires at least 6 months of data before generating a credit score. You can get a VantageScore® after just one month

  2. FICO® also regularly updates its scoring models. The most recent version is FICO® Score 10, though most lenders still use FICO® Score 8

  3. Good credit scores open all kinds of doors. You’ll likely find it easier (and cheaper) to borrow money and qualify for better credit card offers

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