FICO Score vs. Credit Score: What's the Difference?

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If you’re wondering about the difference between a FICO score and a regular credit score, the answer is simple: A credit score is simply a number determined by a credit scoring model that lenders use to gauge your trustworthiness as a borrower. A FICO score is a particular brand of credit scores that happens to be the most widely used by lenders, so it’s often used interchangeably with ‘credit score’.

Most credit score models like FICO calculate your credit score based on your debt payment history, how much debt you currently carry, the average age of your accounts, and a few other factors.

Lenders report your credit activity to one or all of the major credit bureaus (Equifax, Experian and TransUnion), who then use the data to generate your credit score. A high credit score signals to financial institutions that you’re an attractive borrower. Lower scores indicate that you pose more credit risk.

A brief history of the FICO score

There are a variety of companies that provide unique credit-scoring models. One you’ve probably heard of is the Fair Isaac Corp., otherwise known as FICO.

The Fair Isaac Corp. developed the FICO Score in 1989. Since then, the scoring system has become an industry standard, as well as a go-to resource for determining consumer creditworthiness. According to Fair Isaac, 90 percent of top lenders use FICO Scores to make billions of financial decisions each year. FICO Scores allow lenders to make more informed credit-granting decisions using algorithms designed to continuously improve previous versions of the score.

Here’s a summary of the FICO credit score range:

  • Exceptional: 800 and higher
  • Applicants with these scores receive the best rates from lenders based on their ability to consistently pay their bills and maintain low debt levels.
  • Very good: 740 to 799
  • These applicants have access to above-average rates and have little or no problem getting credit from lenders due to their proven dependable borrowing habits.
  • Good: 670 to 739
  • Those who fall into the “good” range can still receive competitive rates from lenders, though they may not be able to qualify for some types of credit.
  • Fair: 580 to 669
  • Applicants in this credit range typically have some faults on their credit report, but no major delinquencies. They can receive approval for credit, but the rates will be higher.
  • Poor: 579 and lower
  • Anyone with a poor credit rating will have trouble getting approval for almost any type of loan or credit card. Borrowers will only offer very high rates and may require a large down payment to secure loans.

Borrowers with an exceptional credit rating receive the best interest rates and have little trouble obtaining credit. Those with poor scores may not be able to qualify for a credit card or other loan that doesn’t require collateral.

FICO reports the average FICO Score in the U.S. is currently 695. The level of economic diversity means that this average fluctuates based on different populations, ages and income levels at any given time.

Factors that determine your FICO Score

The FICO scoring system summarizes your credit history and financial decisions using a scientific algorithm that provides detailed information to potential lenders. Payment history and length of credit history are among the factors that go into determining your FICO Score.

Factor% of your FICO Score
Payment history35%
Credit utilization ratio30%
Length of credit history15%
New credit accounts10%
Credit mix10%

Payment history: Your history of making on-time payments toward your debt has the most significant impact on your FICO Score. Bankruptcies, repossessions, foreclosures or liens can also damage your score.

Credit utilization ratio: Your credit utilization ratio looks at your current debt in relation to your credit limits, highlighting how much of your available credit you’re actually using. In line with this, the FICO algorithm determines your credit utilization ratio based on the percentage of your available credit versus the amount you have already borrowed. Having too high a balance on existing credit card accounts can negatively impact your score.

Length of credit history: This is the length of time you’ve had open credit accounts. FICO bases this factor on how long your oldest account has been open, along with the average age of all your lines of credit.

New credit accounts: The frequency with which you open new credit accounts or take on loans is also a determining factor for your FICO Score. Too many credit applications, as well as too many credit checks in a short period of time, may signal to lenders that you’re a credit risk.

Credit mix: Credit mix is a breakdown of your credit cards, auto loans, mortgages and any other type of loan on record. Successfully balancing different types of credit can have a positive impact on your score.

You have more than one FICO score

Different jobs require different tools, and the same goes for lenders. There are multiple types of FICO Scores, and each industry has its unique preferences. Mortgage providers offer sizable loans and tend to be more cautious because of that. They often use FICO 5 or FICO 4 Scores because the presence of unpaid collection amounts usually has a greater impact on the applicant’s scores with these models.

The financial sector has also had to adapt to the ways consumers use and demand credit, and to new data reporting regulations and lender credit-granting requirements. One such example is the amount of credit we use today compared with how much we used a few years ago. According to the Federal Reserve, the number of credit card payments grew by 10.2% between 2015 and 2016. As a result, FICO Scores adjusted to the new “normal” amount of credit usage.

Here’s a breakdown of the different versions of FICO Scores that exist:

Type of FICO scoreWhat it’s used for
FICO Score 8General loan applications
FICO Auto Score 8, FICO Auto Score 5, FICO Auto Score 4, FICO Auto Score 2Auto loan applications
FICO Score 2, FICO Score 5, FICO Score 4Mortgage applications
FICO Bankcard Score 8, FICO Score 3, FICO Bankcard Score 5, FICO Bankcard Score 4, FICO Bankcard Score 2Credit Card applications

In 2019, Experian, FICO and Finicity will launch a pilot program for a new type of credit score called UltraFICO™ Score. Consumers will be able to provide credit reporting agencies access more detailed financial information, including account histories for checking, savings and money market accounts. Finicity will read the data and weigh it against the consumer’s credit information from Experian. FICO will then use that information to deliver a more detailed and predictable view of the consumer’s financial behavior that includes analysis of his or her liquid assets.

VantageScore and other types of credit scores

While FICO has ruled the roost for 30 years, VantageScore hit the scene in 2006 and serves as another credit reporting option for lenders. Your VantageScore is the result of the three major credit bureaus developing a trademarked formula based on factors similar to those FICO uses, including payment history and credit utilization.

VantageScore 4.0 came out in 2017 and is much more predictive than past versions, according to the company. Using machine learning techniques, the scoring model aims to be more consistent and do a better job aligning scores from the three major credit bureaus.

VantageScore 4.0’s scores range from 300 to 850. Similar to FICO, a higher score equals a better credit risk. But not everyone can receive a FICO or another conventional credit report, often because they have little or no credit history. VantageScore claims it can rate 30 million to 35 million additional consumers who can’t obtain their credit score by using machine learning and data mining.

The company breaks down the credit tiers for VantageScore 4.0 as follows:

  • Excellent: 750 and higher
  • Applicants enjoy the most favorable rates and best terms when they apply for a loan or credit card.
  • Good: 700 to 749
  • Anyone with a “good” VantageScore is highly likely to gain approval for credit and receive competitive rates.
  • Fair: 650 to 699
  • Lenders might approve an applicant within this range, but the rates won’t be as competitive.
  • Poor: 550 to 649
  • Applicants are likely to receive less-than-stellar rates and conditions, such as larger down payments, if they’re able to get approval for credit at all.
  • Very Poor: 300 to 549
  • These applicants are not likely to get approval for credit.

VantageScore uses credit factors similar to FICO, though it weighs them differently. Payment history and credit mix are much more influential, while recent credit behavior and debt aren’t so important.

VantageScore applies these percentages to weigh each factor:

Factor% of your VantageScore
Payment history41%
Credit age and mix20%
Credit utilization20%
Recent credit applications11%
Available credit2%

Other types of credit scores

On top of your FICO Score and VantageScore, there are additional credit scores that use different inputs, sources, ratios and ranges to figure out your creditworthiness. Credit reporting bureaus Experian, Equifax and TransUnion all provide consumer credit scores, but they may pull their data from different sources, which is why you may have slightly varying scores from each bureau.

CreditXpert Inc. developed its own scoring tool to help consumers gain a better understanding of their creditworthiness. It can also provide an idea of where your credit rating stands, though these scores will have no bearing on a lender’s decision. For example, if you need a credit score of 690 to qualify for an auto loan, but your score is 630, CreditXpert can provide tips on what you can do to improve your score and reach your credit goals.

How to check your credit score

There are plenty of ways to check your credit score, including through your bank, various websites, or your credit card issuer. Whether it’s your FICO Score or VantageScore, both provide valuable insight into the interest rates and terms lenders might offer you.

You credit score is different than your credit report, which is just a record of your credit history.

You’re eligible to receive your credit reports from TransUnion, Experian and Equifax for free once every year via Checking your credit report also gives you the chance to review it for errors. While mistakes on your report like a misspelled name or outdated employment won’t change your credit score, inaccuracies about account information or lines of credit that aren’t yours can hurt your score and, therefore, your ability to obtain credit at affordable interest rates.

6 ways to improve your credit score

Building credit or raising your score is similar to getting in shape; it won’t happen overnight and requires discipline. While there are plenty of methods to improve your credit, these six tips can help you quickly boost your credit score:

  1. Make loan and credit card payments on time.
  2. Decrease the overall amount of debt you carry, which might mean looking into a debt consolidation loan. Debt consolidation loans enable you to move all your revolving debt into one loan, generally with a lower interest rate, to help you pay off debt faster. Consumers typically use debt consolidation loans to pay off high-interest credit card debt.
  3. Maintain a low balance on credit cards and other revolving debt.
  4. Ask your creditors for more available credit, to increase your available credit-to-credit-used ratio.
  5. Don’t close unused credit cards, as they can improve your credit utilization rate.
  6. Check your credit report regularly, and dispute errors promptly.

The bottom line

Credit scores play a significant role in almost all aspects of your financial life, from buying a home to qualifying for auto or student loans. Regardless of why you need credit, make a habit of monitoring your credit score and looking for ways to keep it high.

Deborah Huso has been writing on finance, real estate, and business for two decades with articles appearing in U.S. News & World Report, HousingWire, and California Real Estate. A book author and ghostwriter, she is also founding partner of WWM, a niche communications firm serving the housing, finance, real estate, and construction sectors.

The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.