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FICO and VantageScore are the ‘Coke and Pepsi' of credit scoring, says credit expert—what to know about each

FICO and VantageScore are the ‘Coke and Pepsi’ of credit scoring, says credit expert—what to know about each
Delmaine Donson | E+ | Getty Images

When you view your credit score, you're likely to see a different three-digit number depending on whether you checked your score online, on your banking app or via another means.

Although you have multiple credit scores, they're mainly calculated by two companies: VantageScore and FICO, which are the two main credit scoring systems used by the majority of lenders to evaluate how well you're managing your credit.

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"Think of those like Coke and Pepsi," John Ulzheimer, a credit expert who formerly worked for FICO and Experian, tells CNBC Make it. "You have FICO-branded scores and VantageScore-branded ones."

But there are a few differences between the two. For one, each company calculates your score differently.

Here are the categories used to calculate your credit score according to the VantageScore model:

  • Extremely influential: Balance and available credit, total credit usage
  • Highly influential: Credit mix and experience
  • Moderately influential: Payment history
  • Less influential: New accounts opened and length of credit history

VantageScore was created in 2006 by the three major credit bureaus: Experian, Equifax and TransUnion. Its scores are used by a variety of financial and nonfinancial institutions for lending products such as credit cards, auto loans, mortgages and tenant screenings, according to the company's website.

Additionally, VantageScore uses data like your rent and utility bill payments to create your credit profile and can calculate your score after your credit account has been open for at least one month, per the company's website.

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FICO credit scores, on the other hand, have been around for over 25 years and are more commonly used. In fact, they are used by 90% of the top lenders in the U.S. in order to asses a potential borrower's credit risk, per FICO's website. And your credit history needs to be at least six months long in order for FICO to generate your score.

Although FICO scores are also used by lenders when you apply for credit, a mortgage or an auto loan, FICO weighs the factors it uses to calculate its credit scores differently.

  • Payment history: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • Credit mix: 10%
  • New credit: 10%

Whether its VantageScore or FICO, the key to boosting your credit score and maintaining a healthy one comes down to three key steps, says Matt Schulz, LendingTree's chief credit analyst:

  1. Consistently paying your bills on time
  2. Keeping your balances as low as possible
  3. Avoiding applying for too much credit too often

"If you do these things consistently for years, your credit is going to be just fine," Schulz says.

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