What's the Difference Between FICO Score and VantageScore?
Your credit score can be one of the most important numbers in handling your personal finances. It can determine important interest rates like your mortgage or an auto loan, your insurance rates, and it can even be the deciding factor in a job application.
Your credit score can be one of the most important numbers in handling your personal finances. It can determine important interest rates like your mortgage or an auto loan, your insurance rates, and it can even be the deciding factor in a job application.
When most people think of their credit score, they think of just one three-digit number. In fact, every consumer has dozens of credit scores based on different scoring models. The two most popular scoring models are currently FICO Score 8 and VantageScore 3.0.
But depending on where you check your credit score, you'll get either a FICO score or a VantageScore. And the two scores can be wildly different even if they both use data from the same credit reporting agency. That's why it's important to know the differences between a FICO score and a VantageScore.
Similarities in FICO and VantageScore
- Both most commonly use a range of 300 to 850. Older versions of VantageScore (1.0 and 2.0) used a range from 500 to 990. Some FICO scoring models for specific industries have a broader range.
- Both are derived from information on your credit report from Equifax, Experian, or TransUnion.
- Both are used by lenders to determine credit risk of potential customers.
Even their similarities aren't that similar. While both scoring models are used to determine credit risk, 90% of lenders rely on FICO scores instead of VantageScores to make those decisions. And while they both use the same data, the way they use that data differs drastically between the two scoring models.
How FICO calculates your credit score
FICO offers fairly explicit details on how its scoring model calculates your credit score. It uses five main factors with the following weights:
- 35% payment history. If you've always paid your bills on time, you'll be one-third of the way to a perfect score. The more severe, recent, and frequent you've had any late payments, the greater the impact on your FICO Score.
- 30% credit utilization. FICO Score 8 considers the total of how much you owe across all of your accounts, but more importantly, it factors in what percentage of your available credit you use.
- 15% length of credit history. This includes the age of your oldest account, the average age of all of your accounts, and the age of specific types of accounts (credit, auto loan, etc.).
- 10% new credit. This factor considers the number of new accounts, how long it's been since you opened a new account, and recent hard inquiries on your report.
- 10% credit mix. Having a variety of different types of credit accounts will improve your score.
How VantageScore calculates your credit score
VantageScore isn't nearly as specific as FICO when it comes to how it determines your credit score using its scoring model. It provides a rough outline of factors it considers important and those it considers less important.
- Extremely influential -- payment history. Just like FICO Score, VantageScore puts payment history at the top of the list. It won't say how much it weighs it in factoring your overall score, though.
- Highly influential -- age & type of credit, credit utilization. It's unclear if VantageScore weighs credit mix or credit length more or less than FICO because it lumps both of them into one category it deems "highly influential." Credit utilization is weighed heavily in both the VantageScore and FICO Score models.
- Moderately influential -- total balances. VantageScore separates out total balances from the credit utilization factor, but it's only moderately influential. That seems similar to how FICO factors in credit utilization, putting a larger emphasis on lower utilization than it does on lower total balances.
- Less influential -- available credit, recent credit behavior & inquiries. VantageScore may benefit consumers with less available overall credit, suggesting you only open credit you need. Similar to FICO Score, VantageScore likes to see fewer hard inquiries on your report.
More differences between FICO and VantageScore
Beyond the big scoring differences, there are a few more subtle differences between FICO and VantageScore:
- VantageScore affords consumers 14 days to rate shop new loans. FICO provides 45 days.
- VantageScore includes rent, utility, cable, and phone bill payments in your score. FICO doesn't include those factors in its scoring model.
- VantageScore weighs a late mortgage payment more heavily than late payments on other debts.
- VantageScore doesn't factor in paid collections. FICO Score 9 also drops paid collections, but the more popular FICO Score 8 still does.
FICO Score vs VantageScore
If you're looking to get a good idea of what potential lenders will see when they check your credit, you'll want to get a FICO score. Preferably, you'll get a score based on data from each credit bureau. 90% of lending decisions are based on some form of the FICO scoring model.
Using VantageScore as part of your decision making for loan or credit card applications can provide a false sense of confidence depending on your credit history. It also might suggest you apply for an inferior loan or product because it has a lower score than your FICO Score.
VantageScore is still useful for keeping an eye on trends. It's very likely changes in your VantageScore will correlate with changes in your FICO Score. If you can't access one of your FICO scores, a VantageScore is certainly better than nothing.
Alert: highest cash back card we've seen now has 0% intro APR until nearly 2025
If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Motley Fool has a disclosure policy.
Related Articles
View All Articles
4 Little-Known Perks of a Costco Membership
![Dana George]()
By: Dana George | Updated - First published on July 25, 2023
Costco has a faithful legion of fans -- otherwise known as members. There are 123 million of them, to be precise. Throughout the years, Costco has added new membership benefits, some less well-known than others. Here are four that members may not realize exist.1. RV parkingWhether you spend part of each year visiting the highways and byways of North America or you're hoping to rent an RV for your next vacation, it's good to know that some Costco locations allow RVs to park overnight in their lots. Free overnight parking can certainly cut down the cost of travel.Consider the convenience. You arrive near closing time, pick up all the items you've already burned through or forgotten to bring, and spend the night in a well-lit lot. Granted, pulling an RV into a (typically) packed Costco lot may not be the easiest thing you've ever done, but once the lot clears out, you may even hear the sound of crickets.Notice we said that some Costcos permit overnight parking for RVs. When a store does not, it's often because local ordinances don't allow it. However, with so many Costcos scattered across the country, you should have options.The easiest way to determine which Costcos allow overnight RV parking is to check this Costco locations finder. Once you see one near where you plan to stay, call that store and ask to speak with the manager. Once you have them on the line, ask about their overnight policy. If the store does permit overnight parking, ask for permission to stay. According to the Camper Report, Costco has rules for campers, so you may want to ask where you can get a copy of those.2. Home, auto, renters, and specialty insuranceIn the back of our minds, most of us realize that Costco offers insurance, but we're not sure of the details. Partnering with CONNECT, powered by American Family, Costco members receive discounted rates on many of their insurance needs. Beyond the initial discount, CONNECT allows you to add more. For example, you may qualify for a safe driving, multi-policy, or student discount.And if you're an Executive member, CONNECT sweetens the pot even more by providing you with benefits like roadside and lockout assistance.At a time when many people are unhappy with the insurance industry, 9 out of 10 members who sign up for CONNECT coverage go on to renew their policy with the insurer.3. Home and business suppliesWhile it may occur to you to pick up envelopes and printer paper at Costco, have you ever taken advantage of the low prices on items like checks, ink stamps, and address labels? Many of the supplies you need to take care of business -- at home or in the office -- are available for up to 50% off.Executive members enjoy an even deeper discount.4. Floral deliveryOnce you factor in delivery costs, sending a lovely bouquet of flowers to someone can cost a small fortune. That's not the case at Costco. Costco's online floral department offers everything from anniversary and graduation bouquets to bulk flowers. And here's where the real savings come in: Delivery is free. The price you see listed on the site, plus tax, is the price you pay.Few things are more frustrating than typing your credit card number into a florist's site, only to learn that delivery costs nearly doubled your purchase price.As Costco layers on new perks, keeping track of them may become even more difficult. It's a good idea to check periodically to see if there are any you're not taking full advantage of.
SNAP Benefits Will Increase in 2024. Here's How Much a Family of 4 Will Receive
![Emma Newbery]()
By: Emma Newbery | Updated - First published on Aug. 7, 2023
Are SNAP benefits enough?A monthly payment of $973 for a household of four equates to around $8 per person per day. While SNAP benefits aren't designed to cover everything, it isn't easy to feed a family on around $2.66 per person per meal. Indeed, research from the Urban Institute showed that the maximum benefits often don't cover a family's food costs. "Amid inflation, SNAP benefits did not cover the cost of a meal in 99 percent of counties in 2022," said the report.The new benefit amount -- a monthly increase of $34 for a household of four -- is roughly in line with cost-of-living increases measured by the Bureau of Labor Statistics (BLS). Its latest Consumer Price Index figures show that the cost of all items in June, 2023 was up 3% over the year before. However, inflation does not impact all aspects of life equally.The BLS data also shows that food at home increased by 5.7% year over year. The new SNAP benefits do not match this. Hypothetically, a 5.7% increase in benefits for a family of four would mean a new monthly payment of $992, rather than the planned $973.In addition, this year brought the end of the pandemic-era emergency food benefits throughout the country. According to CBPP calculations, this meant the average person received about $90 a month less in SNAP benefits. Even factoring in the increased SNAP benefit amount, many households have seen a significant drop in their food benefit amount, and the revised 2024 payments will do little to close this gap.How to make your SNAP benefits go furtherIt can take time and energy to provide healthy food for your family on a strict budget. The challenge is that in a busy household, time and energy are also limited resources. Even so, if you can carve out some time to plan your grocery-shopping trip, it can make a big difference.Here are some ways you might stretch your SNAP benefits a little:Use cash back apps and coupons: Look for cash back apps that work in stores that take your EBT card. You'll usually need to download an app and then scan your receipt after you've been to the store. Pay attention to coupons, whether in store or online as these can often carry hefty discounts.Always shop with a list: Planning your food shopping is one of the best ways to reduce costs. Even more so if you use a cash back app or coupons. Check what offers are available on items you normally buy before you go shopping. Mark the items that qualify for rewards or discounts on your list, so you don't miss them when you're shopping.Look for double up programs: There are Double Up Food Bucks or other programs in various states that essentially give you two for one on all produce at participating farmers markets and stores. It's a great way to get more fruit and vegetables for your SNAP dollars.Buy in bulk and batch cook: It isn't always easy to find the extra cash for bulk buying when you're eking out every cent. However, if you can manage it, you may be able to save both money and time. You might, for example, batch cook a stew and freeze portions for future meals.Unfortunately, food insecurity still impacts many American households. If you don't have enough money to feed your family this month, look for additional help. Find out what food pantries and soup kitchens are operating in your area on which days, and whether you'll need to present any documents. Call United Way at 211 for information about assistance programs in your area.
Does Your Income Make You Upper Class, Middle Class, or Lower Class?
![Christy Bieber]()
By: Christy Bieber | Updated - First published on Sept. 5, 2023
Incomes vary widely across the United States, with some people making many times the amount that others earn. If you've ever wondered how your personal finances stack up, and what "class" your income officially puts you in, here's what you need to know.What income do you need to be upper, middle, or lower class?Based on 2021 data, here's what you would need to earn in order to be in each class:Lower class: This is defined as the bottom 20% of earners. Those in the lower class have an income at or below $28,007.Lower middle class: This is defined as individuals in the 20th to 40th percentile of household income. Earnings among this group are between $28,008 and $55,000Middle class: The middle class is officially those whose earnings put them in the 40th to 60th percentile of household income. The income range is $55,001 to $89,744.Upper middle class: Anyone with earnings in the 60th to 80th percentile would be considered upper middle class. Those in the upper middle class have incomes between $89,745 and $149,131.Upper class: Finally, the upper class is the top 20% of earners and they have incomes of $149,132 or higher.Take a look at these numbers and see where you fall based on your own earnings. And remember, this is a snapshot in time -- your earnings can change throughout your life, and so can your class designation.Will your success be determined by your income and class?It's probably not a surprise that those in the upper classes or in the upper middle class do have a higher net worth than those in the lower class or the lower middle class. But the disparity is greater than you might think. While the median net worth of those with incomes of $149,132 or higher is $805,400, the median net worth of those in the lower class is just $12,000.Your income impacts how easy it is for you to build wealth. If you make more money, it is easier to save it and invest it in a brokerage account where it can work for you. If you make less money, then you may struggle even to cover the necessities out of your checking account, much less to buy valuable assets that help you grow richer over time.But that doesn't mean people who don't make a lot of money can't be a financial success. A lot depends on what you do with the money you actually have, including how much you spend and how much you save.There are plenty of people who make over $100,000 a year who live paycheck to paycheck, and plenty of people with incomes that put them squarely in the lower or lower middle class who have diligently saved and grown quite wealthy over many years.Here's how you can improve your standingDon't be discouraged if you aren't in the class you hope to be. For one thing, you have opportunities to increase your income by taking the following steps:Learning new job skills: You could obtain a certification, take part in a management training program at work, or take some classes to develop skills that may help you get promoted (such as computer training courses or public speaking classes), depending on your industry.Take on a side hustle: The average side hustle brings in $483 per month, which is a good amount of extra money that could make a meaningful difference in your income.Work some extra hours: If your company allows you to work overtime, take advantage of it, as many people are paid time and a half for overtime hours.Negotiate your salary: According to Pew Research, when workers negotiated for higher pay, 28% said they received the extra money they asked for and 38% indicated they were given more than originally offered but less than their ask. Whether you are getting a new job or staying at your current job but feel you're underpaid, it doesn't hurt to make a request for more money -- especially if you can find salary data to back up the fact that others in your industry are paid more.And even if your earnings never put you in the top 20% of earners, you can still have a rich life and end up with the financial security you deserve -- especially if you prioritize saving as much as you can for as long as you can.
4 Rich People Habits You Should Copy
![Christy Bieber]()
By: Christy Bieber | Updated - First published on Sept. 13, 2023
If you want to be rich, it can be helpful to do things that millionaires and other wealthy people are doing. Fortunately, identifying the habits of financially successful people doesn't have to be hard. Here are four rich people habits you should copy. 1. Use debt as a toolWealthy people are not afraid of debt. They understand that it can be used as a tool to help them use their money as wisely as possible and increase their net worth.Many wealthy people borrow money to do things like start businesses or invest in real estate. They also borrow when they can do so at a low rate, rather than tying up their cash in something that doesn't provide a very good return on investment. For example, Warren Buffett got a mortgage when he bought his home even though he could have paid cash -- because he wanted to invest his money instead. He borrowed about $120,000 in 1971 (in the form of a mortgage loan) and invested the money instead of paying cash for the home. The invested funds ended up being worth around $750 million. Rather than being afraid of borrowing, be smart about when and how you use debt. For example, it makes sense to take out a mortgage to buy a home rather than paying cash because your home is an asset that should increase your net worth, and the mortgage interest rate will usually be lower than the return you could get with other assets like stocks. But it does not make sense to put a vacation on a credit card, as you'll just be incurring interest for something that doesn't increase your wealth in the long run. 2. Prioritize investing Research has shown wealthy people save at higher rates. This doesn't apply to people who were born rich either. Wealthy people with "new money" tend to have even higher savings rates and earn higher returns. When you prioritize investing, you can grow wealthier much more easily because your money is working for you. You don't have to earn every $1 that grows your net worth. Your money can earn returns, which can be reinvested and earn even more for you.If you invest $10,000 today and earn a 10% average annual return, that $10,000 will be worth $174,494 in three decades even if you never add another dollar to your account. That's a lot of money you didn't have to personally earn.The more you invest, the more you benefit from compound growth and the easier it is to get rich -- since less effort is required from you to make money. Open a brokerage account today if you want to build wealth. If you're not sure what to invest in, an S&P 500 index fund is a pretty smart bet. 3. Develop multiple income streamsMany rich people have multiple sources of income. Their money may come from a job, but also from investment income or other sources. If you are dependent solely on one job, unemployment could leave you without funds and the ability to build wealth. You're also limited in how much you can earn since you only have so much time to work.But if you develop multiple income streams, your finances are less precarious and you can also earn money in multiple ways. You can develop multiple income streams by:Taking on a side hustleTurning your hobbies (such as crafting or dog walking) into a source of incomeInvesting in assets that provide dividendsBuying investment real estateConsider where your interests are and how you can make money outside of work to help your wealth grow. 4. Set long-term goals Finally, many wealthy people look toward the future when deciding on spending decisions. While a vacation or impulse purchase today may seem fun, it's better to look at the big picture, consider what you want to accomplish, and prioritize it.When setting your own goals, employ the SMART principle. Your goals should be specific, measurable, achievable, relevant and time limited. For example, you could set a goal to save $500 a month toward retirement over the next year and track your progress throughout the year. By adopting these four habits, hopefully you too can become wealthy. I've tried them all, and they've made a noticeable difference in helping my net worth grow.
3 Reasons I Don't Like Aldi as Much as I Used To
![Maurie Backman]()
By: Maurie Backman | Updated - First published on Sept. 13, 2023
At some point in 2022, I discovered Aldi and began shopping there weekly. I found that I was able to save money on my grocery bill by purchasing certain produce items there. And since I happen to have an Aldi adjacent to my local Costco, it wasn't particularly out of my way.But over the past few months, I've become less enamored with Aldi. Here's why.1. The selection is just too limitedAldi -- at least near me -- is a minimally stocked grocery store. The shelves aren't loaded the way they are at my nearby ShopRite and Stop & Shop.To be fair, this was the case when I first started shopping there. But because there's just not a lot of selection, I'm generally limited to only buying a few items when I pop into Aldi.Not so long ago, I was running into Aldi for some fruit, which I usually buy there, and I needed to grab shredded cheddar cheese. Normally, I get that at Costco, but I didn't want to run next door to Costco and wait in a line for cheese alone. Unfortunately, though, Aldi didn't have the cheese I needed, so I had to make an extra stop anyway.2. The inventory is too inconsistentNot only is there a limited selection of food items I can buy at Aldi, but sometimes, I can't even find the five or six things I'm looking for. Aldi was once my go-to source for avocados, since it's an expensive purchase and Aldi tends to sell them for less than Costco (at least in my area). But the last few times I stopped at Aldi, avocados weren't in stock.And that's happened to me with other things, too. Over the past several months, I've struggled to find everything from cucumbers to strawberries at Aldi as well.3. What the store saves me on groceries, I lose via lost working hoursShopping at Aldi still has the potential to save me a little money on groceries. At a time when supermarket prices are up 3.6% on an annual basis, that helps.The problem, however, is that even though Aldi is right near Costco in my neighborhood, thereby allowing me to combine those trips, it still takes time to visit an extra supermarket. I have to find parking, wait in a checkout line, and spend time searching the shelves.While it's nice to save $2 here and $3 there, the reality is that a stop at Aldi might cost me 20 or more minutes of work -- especially when I don't manage to find the things I need. And losing out on that work time often means forgoing more than $2 or $3 of income. So from a time perspective, it's just not worth it.Shopping at Aldi could make sense for a lot of people. If you're someone with flexibility in your schedule and grocery list, and you're not so picky about the brands you bring home, then it could pay to spend the time visiting Aldi, even if you don't always manage to find all the things you need. But I've reached the point where shopping at Aldi makes less and less sense for me, so I'll most likely stop going there unless it's a one-off basis.