American Express Has Made a Big Upgrade to Its Free Credit Score Tool

If you have any American Express cards, you probably received an email recently about changes to its credit score service. You'll still be able to view your credit score free of charge with American Express MyCredit Guide. It just won't be the same credit score as before.

American Express MyCredit Guide will provide your FICO® Score instead of your VantageScore. To view your credit score from your American Express account, open the menu and select "Free Credit Score & Report." The credit score tool is still providing a VantageScore at the time of this writing, but that will change soon, according to American Express.

At first, this might not seem like a big deal. FICO® Score, VantageScore -- they're both credit scores, right? While that's true, there's actually a sizable difference in how useful these credit scores are.

Your FICO® Score is more important than your VantageScore

When it comes to credit scoring systems, FICO is the clear leader, and it's not a close race. FICO was the first to introduce a consumer credit score, which it did in 1989. Nowadays, 90% of top lenders use FICO® Scores. So, when you apply for a loan or credit card, odds are that the lender will check your FICO® Score.

VantageScore was introduced in 2006. It was created by the three consumer credit bureaus (Equifax, Experian, and TransUnion) as an alternative to FICO® Scores. This was in large part because the credit bureaus needed to pay FICO to use its scoring system. By getting lenders to use the VantageScore system, the credit bureaus can save money.

Most lenders and credit card companies don't use VantageScore, though. For that reason, some people derisively refer to it as a "FAKO Score." Sure, it's a credit score, but it's not one that a whole lot of lenders are going to see when they check your credit.

However, many free credit score tools provide your VantageScore instead of your FICO® Score. The most likely reason for this is because VantageScore is cheaper for companies to provide. But your VantageScore and your FICO® Score can be different. For example, my most recent VantageScore is 802, and my most recent FICO® Score is 758, a difference of 44 points.

This leads to confusion for consumers. Your free credit score tool shows you one score (your VantageScore), but when you fill out a credit card or loan application, the lender checks another score (your FICO® Score). If your FICO® Score is lower, which is often the case, then your application could be denied even if you thought it was a sure thing.

How to stay on top of your credit score

VantageScore has its uses. It gives you a general idea of your credit and the factors affecting it. Credit score tools that provide your VantageScore also normally give you helpful information on improving your credit score. Following these tips can improve your FICO® Score, too. After all, there's quite a bit of overlap in the credit scoring systems and what they value.

Still, it's a good idea to use a service that provides access to your FICO® Score, especially before applying for credit cards and loans. It's normally different from your VantageScore, and that difference can sometimes be enough to affect whether your application is approved or denied.

For example, if you plan to apply for any of the best credit cards, most of those are aimed at consumers with a credit score of 670 or higher. If your VantageScore is 690, but your FICO® Score is 660, you may want to work on your credit first. The credit card issuer will most likely check your FICO® Score, which won't quite meet the requirements.

While most free credit score tools provide your VantageScore, there are exceptions. American Express MyCredit Guide is one option, and it's not just for cardholders. You can still sign up even if you don't have an American Express card, and it's a well-designed credit score service. It provides your credit score, gives you the option to set score goals, and has several other tools to help you get a higher score.