How Many Credit Scoring Models Are There?

You may have noticed that a couple different scores pop up when you check your credit. That’s because there are different credit scoring models. FICO® and VantageScore® dominate the landscape and influence many lending decisions with the scores they generate. That said, some lenders review credit reports manually or use their own proprietary models. Read on to learn more about credit scoring models, what they are and how they differ.

What is a credit scoring model?

A credit scoring model is an algorithm used to calculate the riskiness of a borrower. It generates a credit score that helps lenders make informed decisions when approving loans. Factors in your credit history, like late payments and age of credit, may be given different weights based on the model.

When it comes to credit scores, higher is typically better. The two main credit scoring models assign scores between 300 and 850. If your score is higher, you’re more likely to get approved for a loan and the terms of your loan will be better than if your score is lower.¹ Learn more about the basics of building credit.

The credit scoring process

Understanding how your credit score is created can help you make smarter financial decisions. It all begins with credit bureaus like Experian, Equifax and TransUnion that collect your credit data and compile reports. Credit scoring models like FICO® and VantageScore® analyze that data to produce a score. Lenders then typically request your score and your report when making loan decisions. Your score may vary because different models are being used, but also because different reporting bureaus have different data.

Comparing different credit scoring models

The two main credit scoring models, FICO® and VantageScore®, have different formulas for creating your credit score, but are similar enough that your score shouldn’t vary significantly between them.¹ Read our article on how credit utilization works to learn more.

Key differences in credit scoring models

FICO is the oldest and most established credit scoring model. It weighs length and type of credit more heavily than VantageScore, as well as “New Credit,” which analyzes how many of your credit lines were opened recently.

VantageScore was established in 2006 as a competitor to FICO with the goal of making access to credit more equitable.² It weighs payment history more heavily and credit length less than FICO. It values paying down debt more than making minimum payments and ignores collections less than 250 dollars.¹

What is the most commonly used credit scoring model?

The FICO score is used by 90% of large lenders.³ It was developed in 1989 and can be considered the “classic” score. The FICO model has gone through many revisions over the years. Some lenders may use the FICO 9 model while others may use FICO 5, for instance. There are also industry-specific versions of the FICO model for things like insurance, auto loans and credit cards. Some notable companies that use the VantageScore model rather than FICO are Credit Karma, Capital One, Chase and us, OneMain Financial.

A model borrower

Credit can be complicated, but understanding the basics helps you have more control over your financial future. Whether your credit score is ideal or needs some work, being in the know means you have the tools you need to become a model borrower.

1. Credit Scoring: FICO, VantageScore & Other Models - Debt.org." 16 Dec. 2021, https://www.debt.org/credit/report/scoring-models/. Accessed 23 Apr. 2022.
2. "VantageScore: Home." https://vantagescore.com/. Accessed 22 Apr. 2022.
3. "FICO ® Scores are used by 90% of top lenders." https://www.ficoscore.com/about. Accessed 24 Apr. 2022.