FICO Score vs. Credit Score: What Lenders Really Use

As you get familiar with your credit, you’ll quickly realize multiple types of scores exist. Although both FICO scores and credit scores exist, understanding which one lenders use can be helpful. Explore the differences between FICO scores vs. credit scores below.

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What Is a Credit Score?

A credit score is a three-digit number designed to give lenders an idea of your credit usage habits. This general term encompasses many specific scores, including FICO scores and VantageScores. Typically, credit scores fall on a range from 300 to 850, with higher numbers representing more responsible credit usage patterns.

Generally, your credit score is calculated based on the following:

• Your payment history

• Outstanding balances

• Length of credit history

• Applications for new credit

• The types of credit accounts you have

Different credit bureaus and organizations craft different credit scores. Although the underlying information that creates a credit score is generally the same, the resulting credit score might be different based on the type of formula used.

What Is a FICO Score?

A FICO score is a type of credit score issued by the Fair Isaac Corporation. Specifically, a FICO score uses the following weighting method to determine your credit score:

• Payment history on credit account: 35% of your FICO score

• The amounts you owe: 30% of your FICO score

• Your credit history: 15% of your FICO score

• New credit accounts: 10% of your FICO score

• The type of credit accounts you hold: 10% of your FICO score

The resulting three-digit number represents your FICO score. This specific credit score is most widely used by lenders, with up to 90% of top lenders using FICO scores to make lending decisions.

Notably, there are several different FICO scoring models. The differing models are often applied to specific situations.

• The FICO score 8 is most common for general lending.

• The FICO auto score is used by auto lenders.

• The FICO 2, 4 and 5 models are most often used by mortgage lenders.

FICO Score vs. Credit Score: Key Differences

FICO scores are calculated differently than other credit scores. Although the underlying credit information is the same, your FICO score might look different than your other credit scores.

The table below highlights the differences in a FICO score vs. credit score.

Although most lenders look at your FICO score, regularly monitoring any credit score can help you keep track of your credit health. If you notice a significant drop in your credit score, your FICO score will likely be impacted too.

Why Your FICO Score May Differ From Other Credit Scores

It’s common to see different credit scores depending on where you check. That’s because FICO scores and other models like VantageScore use different scoring formulas, weigh credit factors differently, and may even pull data from different credit bureaus. Additionally, each scoring model has multiple versions, and lenders or credit platforms may use older or customized versions. Even the timing of when your score is updated can lead to small variations.

Why Do Lenders Use FICO Scores More?

FICO scores have an established reputation. Since the scores have been around since 1989, lenders trust the validity of the underlying credit scoring model.

Additionally, FICO scores can be tailored to different loan types. For example, a mortgage lender can choose to look at a score curated for mortgage loans while an auto lender can look at a slightly more relevant score.

The long-term tenure of FICO also means that many lenders have built their loan approval systems around FICO formulas, so switching to a new credit score represents extra work for them.

Additionally, FICO models have built-in predictions on how likely you are to miss a payment, which is something most lenders are especially interested in. After all, they want to know that the applicant is unlikely to miss a payment or adjust their interest rates accordingly.

When You Check Your Own Credit, Which Score Do You See?

When you check your own credit, the credit score you see varies based on how you accessed it. Here’s a look at what to expect when checking your own credit:

• If you use a free app, like Credit Karma, you’re usually seeing a VantageScore.

• If you check directly with Experian, you might see your FICO score. It should say which score you are seeing in your paperwork.

• Some credit card companies also show your FICO score for free.

• If you check through myFICO, you’ll see your FICO score.

• If you’re applying for a mortgage, you’ll want to see your FICO Mortgage Scores (versions 2, 4, 5), which are only available through myFICO.com.

Which Score Matters Most When Applying for Credit?

Since 90% of lenders check your FICO score when applying for credit, it tends to matter more than other credit scoring models. Specifically, mortgage lenders, auto lenders and credit card issuers tend to check your FICO score.

But in different situations, different credit scores might matter more. For example, personal loan lenders, insurance companies and landlords might check either your FICO or VantageScore when making decisions. With that, your VantageScore is equally important in those situations.

It’s important to realize that all versions of your credit score are based on your underlying credit report. Your credit management decisions will impact all of your credit scores in different ways.

If you want to improve your credit score, including your FICO score, consider doing the following:

• Stick to on-time bill payments.

• Keep your credit card balance low.

• Avoid too much new credit at once.

FAQ

Here are the answers to some of the most frequently asked questions about Fico scores vs. credit scores.

• Is a FICO score the same as a credit score?

  • A FICO score is a type of credit score. With that, your FICO score might be different from other credit scoring models.

• Why is my FICO score lower than my credit score on free apps?

  • Your FICO score is calculated differently from other credit scores. If your credit score is higher through a free app, it might use a model with other scoring parameters that lead to a higher score.

• Which score do mortgage lenders check?

  • Generally, mortgage lenders consider your FICO score when making loan decisions.

• How can I check my FICO score for free?

  • You can check your FICO score for free through the free version of myFICO.

This article originally appeared on GOBankingRates.com: FICO Score vs. Credit Score: What Lenders Really Use