Credit scores are a significant part of the modern finance system, as they determine whether you can get loans, credit cards or favourable interest rates. When you check your credit score, you will notice that you have a different three-digit number based on whether you accessed the information online, through your banking app or through another means. Though you may have more than one credit score, they’re mainly calculated by two companies: VantageScore and FICO.
These two companies control the US credit scoring market. They are the two most common credit scoring models used by most lenders to determine how well you are managing your credit. Both these companies create scores that can be used by lenders and creditors to assess applicants and manage customers’ accounts.
However, VantageScore and the FICO models use slightly different credit score factors to calculate the scores, which results in a different final number.
Knowing how these models work and the factors that calculate credit scores can help you improve your financial situation and avoid surprises when applying for credit.
How FICO Calculates Credit Scores
FICO credit scores have been around for more than 25 years and remain the most widely used scoring model. About 90% of the top lenders in the United States rely on FICO credit scores to assess a borrower’s credit risk.
To generate a FICO score, a person’s credit history usually needs to be at least six months old. While these scores are commonly used when applying for credit cards, mortgages or auto loans, the model assigns different weightage to the factors it evaluates.
Payment history carries the highest importance at 35%, followed by amounts owed at 30%. The length of credit history contributes 15%, while credit mix and new credit activity each account for 10%, reflecting how lenders prioritise repayment behaviour and responsible credit usage when assessing creditworthiness.
How VantageScore Calculates Credit Scores
VantageScore calculates credit scores by analysing several key behavioural indicators, with the most influential factors being balances, available credit and total credit usage. This is followed by credit mix and overall credit experience. Payment history is considered moderately influential, while newer accounts and the length of credit history carry less weight in the scoring model.
Developed in 2006 by the three major credit bureaus, Experian, Equifax and TransUnion, the VantageScore system is widely used by both financial and non-financial institutions for products such as credit cards, auto loans, mortgages and tenant screening.
The model can also include alternative data like rent and utility payments when building a credit profile, and it is capable of generating a score once a credit account has been active for at least one month.
FICO Vs VantageScore: How The Two Scoring Systems Are Built
Though both scoring systems aim to measure how likely someone is to repay borrowed money, their models are not identical.
The VantageScore system uses a single tri-bureau model that works across credit reports from Experian, Equifax and TransUnion. FICO develops bureau-specific versions of its scoring models. This means that even if the score version has the same name, there can be slight variations depending on which credit bureau’s data is used.
Eligibility To Generate A Credit Score
The two systems also differ in how much credit history is needed before they can generate a score.
FICO generally requires at least one credit account that is six months old, along with some activity in the last six months. VantageScore is more flexible and can generate a score if your credit report shows at least one account, even if it is newer than six months.
But neither system will generate a score if the credit report indicates that the consumer is deceased.
Score Bands And What They Mean
Across most scoring models, a higher number indicates lower credit risk, which is why lenders usually offer better interest rates and terms to borrowers with higher scores.
Standard FICO scores usually range from 300 to 850, while some industry-specific FICO scores can range from 250 to 900.
Earlier versions of VantageScore used a 501 to 990 scale, but newer versions, such as 3.0 and 4.0, now use the same 300 to 850 range as standard FICO scores.
What Is Considered A Good Credit Score
What qualifies as a good credit score can vary depending on the lender and the type of credit you are applying for. But on the common 300 to 850 scale, a score of around 670 is generally considered good under FICO standards, while a score of about 700 is usually viewed as good under VantageScore.
How to Improve Your Credit Score Factors
Improving credit scores involves consistent habits rather than quick fixes. Paying bills on time is critical, since payment history carries a lot of weight. Reducing credit card balances helps improve utilisation ratios. Maintaining older accounts can extend credit history, while avoiding frequent new credit applications prevents unnecessary score drops. These steps strengthen the core credit score factors used by both scoring models.
Overall, whether it is VantageScore or FICO, improving and maintaining a strong credit score largely comes down to three habits. Those habits are paying your bills on time, keeping outstanding balances as low as possible and avoiding frequent credit applications. When you follow these steps consistently over a long period, you build a solid credit history, and your score will remain in good shape.












