Experian Credit Score vs. FICO Score

January 14, 2021 &• 7 min read by Barry Paperno Comments 17 Comments

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When you think “credit score,” you probably think “FICO.” The Fair Isaac Corporation introduced its FICO scoring system in 1989, and it has since become one of the best-known and most-used credit scoring models in the United States. But it isn’t the only model on the market.

Another popular option is called VantageScore, the product of a collaboration between the three major credit reporting agencies: Experian, Equifax, and TransUnion. It uses similar scoring methods to FICO but yields slightly different results.

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Each scoring model has multiple versions and multiple applications—you don’t have just one FICO score or one VantageScore. Depending on which bureau creates the score and what type of agency is asking for the score, your credit score will vary, sometimes siginifcantly. One credit score isn’t more “accurate” than another, they just have different applications. Learn more about the different types of credit scores below.

When you sign up for ExtraCredit, you can see 28 of your FICO scores from all three credit bureaus. Your free Credit Report Card, on the other hand, will show you your Experian VantageScore 3.0.

What Is a VantageScore?

VantageScore was created by the three major credit reporting agencies—Experian, Equifax, and TransUnion. It uses similar scoring methods to FICO but yields slightly different results.

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One of the primary goals of VantageScore is to provide a model that is used the same way by all three credit bureaus. That would limit some of the disparity between your three major credit scores. In contrast, FICO models provide a slightly different calculation for each credit bureau, which can create more differences in your scores.

FICO vs. VantageScore

So, what are the differences between an Experian credit score calculated using VantageScore and one calculated via the FICO model? More importantly, does the score used matter to you, the consumer? The answer is usually no. But you might want to look at different scores for different needs or goals.

Is Experian Accurate?

Credit scores from the credit bureaus are only as accurate as the information provided to the bureau. Check your credit report to ensure all the information is correct. If it is, your Experian credit scores are accurate. If your credit report is not accurate, you’ll want to look into your credit repair options.

Our free Credit Report Card offers the Experian VantageScore 3.0 so you can check it regularly. If you want to dig in deeper, you can sign up for ExtraCredit. For $24.99 per month, you can see 28 of your FICO scores from all three credit bureaus. ExtraCredit also offers rent and utility reporting, identity monitoring and theft insurance, and more.

Features of ExtraCredit

Understanding the Scoring Models

FICO and VantageScore aren’t the only scoring models on the market. Lenders use a multitude of scoring methods to determine your creditworthiness and make decisions about whether or not to give you credit. Despite the numerous options, FICO scores and VantageScores are likely the only scores you’ll ever see yourself.

Here’s what FICO uses to determine your credit score:

  • Payment history. Whether or not you pay your bills in a timely manner is critical, as this factor makes up around 35% of your score.
  • Credit usage. How much of your open credit you have used—which is called credit utilization—accounts for 30% of your score. Keeping your utilization below 30% can help you keep your credits core healthy.
  • Length of credit. The average age of your credit—and how long you’ve had your oldest account—is a factor. Credit age accounts for around 15% of your score.
  • Types of credit. Your credit mix, which refers to having multiple types of accounts, makes up around 10% of your score.
  • Recent inquiries. How many entities have hit your credit history with a hard inquiry for the purpose of evaluating you for credit is a factor for your score. It accounts for about 10% of your credit score.

VantageScore uses the same factors, but weighs them a little differently. Your VantageScore 4.0 will be most influenced by your credit usage, followed by your credit mix. Payment history is only “moderately influential,” while credit age and recent inquiries are less influential.

Each company also gathers its data differently. FICO bases its scoring model on credit data from millions of consumers analyzed at the same time. It gathers credit reports from the three major credit bureaus and analyzes anonymous consumer data to generate a scoring model specific to each bureau. VantageScore, on the other hand, uses a combined set of consumer credit files, also obtained from the three major credit bureaus, to come up with a single formula.

Both FICO and VantageScore issue scores ranging from 300 to 850. In the past, VantageScore used a score range of 501 to 990, but the score range was adjusted with VantageScore 3.0. Having numerical ranges that are somewhat consistent helps make the credit score process less confusing for consumers and lenders.

Your score may also differ across the credit bureaus because your creditors aren’t required to report to all three. They may report to only one or two of them, meaning each bureau likely has slightly different information about you.

Variations in Scoring Requirements

If you don’t have a long credit history, VantageScore is the score you want to monitor. To establish your credit score, FICO requires at least six months of credit history and at least one account reported to a credit bureau within the last six months. VantageScore only requires one month of history and one account reported within the past two years.

Because VantageScore uses a shorter credit history and a longer period for reported accounts, it’s able to issue credit ratings to millions of consumers who wouldn’t yet have a FICO Score. So, if you’re new to credit or haven’t been using it recently, VantageScore can help prove your trustworthiness before FICO has enough data to issue you a score.

The Significance of Late Payments

A history of late payments impacts both your FICO score and your VantageScore. Both models consider the following.

  • How recently the last late payment occurred
  • How many of your accounts have had late payments
  • How many payments you’ve missed on an account

FICO treats all late payments the same. VantageScore judges them differently. VantageScore applies a larger penalty for late mortgage payments than for other types of credit payments.

Because FICO has indicated that it factors late payments more heavily than VantageScore, late payments on any of your accounts might cause you to have lower FICO scores than your VantageScores.

Impact of Credit Inquiries

VantageScore and FICO both penalize consumers who have multiple hard inquiries in a short period of time. They both also conduct a process called deduplication.

Deduplication is the practice of allowing multiple pulls on your credit for the same loan type in a given time frame without penalizing your credit. Deduplication is important for situations such as seeking auto loans, where you may submit applications to multiple lenders as you seek the best deal. FICO and VantageScore don’t count each of these inquiries separately—they deduplicate them or consider them as one inquiry.

FICO uses a 45-day deduplication time period. That means credit inquiries of a certain type—such as auto loans or mortgages—that hit within that period are counted as one hard inquiry for the purpose of impact to your credit.

In contrast, VantageScore only has a 14-day range for deduplication. However, it deduplicates multiple hard inquiries for all types of credit, including credit cards. FICO only deduplicates inquiries related to mortgages, auto loans, and student loans.

Influence of Low-Balance Collections

VantageScore and FICO both penalize credit scores for accounts sent to collection agencies. However, FICO sometimes offers more leniency for collection accounts with low balances or limits.

FICO 8.0 also ignores all collections where the original balance was less than $100 and FICO 9.0 weighs medical collections less. It also doesn’t count collection accounts that have been paid off. VantageScore 4.0, on the other hand, ignores collection accounts that are paid off, regardless of the original balance.

What Are FAKO Scores?

FAKO is a derogatory term for scores that aren’t FICO Scores or VantageScores. Companies that provide FAKO scores don’t call them this. Instead, they refer to their scores as “educational scores” or just “credit scores.” FAKO scores can vary significantly from FICO scores and VantageScores.

These scores aren’t completely valueless, though. They can help you understand where your credit score stands or whether it’s going up or down. You probably don’t want to shell out money for such scores, though, and you do want to ensure the credit score provider is drawing on accurate information from the credit bureaus.

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Source: credit.com

Best credit cards for grocery shopping

Americans spend on average $4,464 in groceries every year, according to the U.S. Bureau of Labor Statistics. Shopping for groceries is one of the main weekly expenses in every American household.

That’s why the credit cards tying reward points to grocery shopping are getting more numerous and their offers are getting increasingly more competitive. In 2020 you have a whole new lineup of cards ready to reward you for the purchases you make at grocery stores.

Here are the best cards whether you like those premium rewards, are an everyday shopper, are building credit, you’d rather skip the prep and go straight to the meal or you like to buy groceries at superstores.

See related: Best cash back cards

American Express® Gold Card: Best for earning Membership Rewards points on groceries

Amex Gold gives you an unprecedented rewards rate whether you’re dining in or out. If that weren’t enough, paying at certain eligible restaurants (see terms for qualifying merchants) after enrollment can get you up to $10 a month in statement credit. You also get up to $120 in Uber Cash every year ($10 per month) that can be applied to U.S. Uber Eats orders – a big plus for those who order their groceries through the platform (must add Gold Card to Uber app in order to receive the Uber Cash benefit).

The intro bonus of 60,000 points when you spend $4,000 in the first six months is excellent, and there are many redemption options, including gift cards, merchandise and travel with no blackout dates.

American Express® Gold Card should appeal to frequent ride-share users and takeout lovers alike. Cardholders enjoy $120 in Uber Cash each year, which can be used for Uber rides, Uber Eats delivery and more. Enroll by Dec. 31, 2021 and you’ll also get a complimentary Uber Eats Pass membership for 12 months, which comes with discounts and $0 delivery fees on eligible restaurant and grocery purchases.

The card charges an annual fee of $250, but if you take advantage of both the Uber Cash and the dining credit, keeping the Amex Gold card will essentially cost you $10 every year.

If you are OK with only redeeming travel directly through Amextravel.com or Amex’s airline partners to maximize the value of the Membership Rewards points you’ll earn, this is a great card for foodies and travelers.

Here’s a closer look at the features:

  • 60,000 American Express Membership Rewards points when you spend $4,000 in the first six months
  • 4 points per dollar spent at U.S. supermarkets on up to $25,000 per year in purchases – 1 point thereafter
  • 4 points per dollar spent at restaurants worldwide (including Uber Eats orders)
  • 3 points per dollar spent on flights booked directly through airlines or on amextravel.com
  • Up to $120 annual dining credit (up to a $10 statement credit monthly) when you pay at Grubhub, The Cheesecake Factory, Ruth’s Chris and participating Shake Shack locations (enrollment required)
  • Up to $120 in Uber Cash per year ($10 per month)
  • No foreign transaction fees

Even though it has fewer features than the Amex Gold, it gives you perhaps the highest cash back rate available on groceries, and it has a lower annual fee – $95. Plus, running errands like groceries is way easier when you get cash back on gas for the commute. Take a closer look:

  • $250 statement credit when you spend $1,000 in the first three months
  • 6% cash back at U.S. supermarkets on up to $6,000 in purchases per year, then 1%
  • 6% cash back on select U.S. streaming services, such as Netflix, Hulu or HBO Max
  • 3% cash back at U.S. gas stations
  • 3% on transit purchases
  • 1% cash back on all other purchases

Chase Freedom Unlimited®: Best for earning cash back on groceries and everything else

For those who don’t want to have to choose a spending category but still want no annual fee, Chase Freedom Unlimited offers a consistent rate of at least 1.5% cash back on all purchases.

  • 5% cash back on travel through Chase Ultimate Rewards
  • 3% cash back on dining and drugstore purchases
  • 1.5% cash back on all other purchases
  • $200 bonus if you spend $500 in the first 3 months
  • Cash back rewards do not expire
  • No annual fee

Target REDcard™: Best for earning cash back on Target purchases

The Target Redcard has no annual fee. This, combined with its standard offer of 5% off in-store purchases applied right at the checkout counter and 5% off at Target.com with free shipping, makes it a great card for frequent Target shoppers, especially since the 5% discount is applied in perpetuity. You can also stack your discount with others available through Target’s Cartwheel app and in-store.

Though most people don’t need 120 days to return an item, you get that with this card when its extra 30 days is combined with Target’s standard 90-day return policy. The extra time could allow a greater piece of mind on those large ticket items you buy.

However, if you’re known to carry a balance, this isn’t the right card for you. The high variable APR can far outweigh the 5% discount, so pay the card off after each billing cycle.

Here’s a snapshot of all the benefits of this card: 

  • 5% off eligible Target purchases in-store and online at Target.com (except pharmacy purchases)
  • Can be used together with Target Circle and other discounts
  • Free two-day shipping on orders from Target.com with no spending minimum
  • An extra 30 days to return items on top of the standard 90-day return policy
  • Early access to special events, products and promotions
  • No annual fee

This card is great because, unlike Target’s Redcard, it offers some cash back outside of Walmart purchases, including 2% cash back at restaurants and travel and 1% cash back on all other purchases.

However, while Target’s Redcard offers its in-store 5% discount with no limit, the Capital One Walmart Rewards Mastercard only offers the same discount in-store for the first 12 months and you have to use Walmart’s mobile wallet on your purchases to get it.

Where this card really shines is online, especially if you do a lot of grocery pickup or delivery orders from Walmart.com.

It’s very easy to apply for and, like the Redcard, it carries no annual fee, as well as some smaller benefits you’ll see below:

  • 5% cash back on Walmart purchases online, including grocery and delivery orders
  • 5% cash back on in-store purchases in the first year when you pay using the Walmart Pay digital wallet
  • 2% cash back on restaurant and travel purchases
  • 1% cash back on all other purchases
  • No annual fee or foreign transaction fee
  • Easily apply via text message
  • Card is automatically transferred to Walmart Pay digital wallet on approval
  • Fraud alerts and the ability to freeze your account

Comparing the best cards for grocery shopping

Card Grocery bonus Other rewards Annual fee
American Express® Gold Card 4 points per dollar spent at U.S. supermarkets on up to $25,000 per year in purchases – 1 point thereafter

 

  • 60,000 American Express Membership Rewards points when you spend $4,000 in the first six months
  • 4 points per dollar spent at restaurants worldwide (including Uber Eats orders)
  • 3 points per dollar spent on flights booked directly through airlines or on amextravel.com
  • Up to $120 annual dining credit (up to a $10 statement credit monthly) when you pay at Grubhub, The Cheesecake Factory, Ruth’s Chris and participating Shake Shack locations (enrollment required)
  • Up to $120 in Uber Cash per year ($10 per month)
$250
Blue Cash Preferred® Card from American Express 6% cash back at U.S. supermarkets on up to $6,000 in purchases per year, then 1%
  • $250 statement credit when you spend $1,000 in the first three months
  • 6% cash back on select U.S. streaming services, such as Netflix, Hulu or HBO Max
  • 3% cash back at U.S. gas stations
  • 3% on transit purchases
  • 1% cash back on all other purchases
$95
Bank of America® Cash Rewards credit card 2% cash back at grocery stores and wholesale clubs
  • $200 in online cash rewards when you spend $1,000 in the first 90 days
  • 3% cash back on a category of your choice (gas, online shopping, dining, travel, drugstores or home improvements and furnishings)
  • $2,500 combined quarterly limit on 2% and 3% cash back categories
  • 1% cash back on all other purchases
$0
Chase Freedom Unlimited® n/a
  • 5% cash back on travel through Chase Ultimate Rewards
  • 3% cash back on dining and drugstore purchases
  • 1.5% cash back on all other purchases
  • $200 bonus if you spend $500 in the first 3 months
$0
Capital One® Savor® Cash Rewards Credit Card 2% cash back at grocery stores
  • 8% cash back on tickets through Vivid Seats (offer ends January 2022)
  • 4% cash back on dining and entertainment
  • 1% cash back on other purchases
  • $300 bonus if you spend $3,000 in the first 3 months
$95
Target REDcard™ 5% discount at Target and Target.com n/a $0
Capital One® Walmart Rewards® Mastercard®
  • 5% cash back on in-store purchases for the first 12 months when using Walmart Pay
  • 5% cash back on Walmart.com purchases, including grocery pickup and delivery orders
  • 2% cash back on in-store Walmart purchases after the introductory period
  • 2% cash back on restaurant and travel purchases
  • 2% cash back on the purchase of gift cards at Walmart (online, app, Walmart Pay or in stores
  • 1% cash back on all other purchases
$0

Honorable mentions

There is no shortage of credit card options that reward grocery spending, so in addition to our top picks above, consider these alternatives.

  • Capital One SavorOne Cash Rewards Credit Card – A no-annual-fee alternative to the Capital One Savor Card, the SavorOne offers the same 2% cash back on grocery store purchases. While it offers a slightly lower rate on dining and entertainment than the Savor card, the SavorOne is a good alternative for those wary to pay an annual fee.
  • U.S. Bank Altitude Go Card – The newly launched U.S. Bank Altitude Go Card offers a competitive rewards rate on both dining and grocery purchases – 4 points per dollar on dining and food delivery and 2 points per dollar on groceries, to be exact. It also offers 2 points per dollar on gas and streaming service purchases and 1 point per dollar on everything else. Plus, it doesn’t charge an annual fee.
  • Amazon Prime Rewards Visa Signature card – If you prefer to do your grocery shopping at Whole Foods, you can’t beat the rewards rate on the Amazon Prime Rewards Visa Signature card. In addition to 5% cash back on Amazon.com purchases, the card offers the same 5% rate at Whole Foods locations. You’ll also earn 2% back on restaurant, gas station and drug store purchases and 1% on everything else. You have to be a Prime member to qualify for the card, but if you spend a significant amount on Amazon orders or at Whole Foods, your rewards can help offset the cost of membership.
  • Apple Card – The Apple Card is best known for its high rewards rate on Apple purchases, but it can also be a great choice for grocery shopping. When you make a purchase via Apple Pay, the card offers 2% back on all qualifying purchases. This is on par with some of the highest flat-rate credit card offers. Just make sure your preferred grocery story accepts the mobile wallet before you work this card into your rewards strategy.

How to pick the right card for grocery shopping

For most of us, using a credit card at a grocery store simply involves taking it out in the checkout line. But if you want to up your grocery shopping game and save some serious money, here are some tips and secret strategies from credit card experts and the most seasoned shoppers we could find.

When picking the credit card you’ll use at the grocery store most experts recommend either a card with a high cash back rate that can provide a percentage off every time you shop or a tiered rewards card that offers specific rewards every time you use it for groceries.

“When you use a cash back card, it’s like having a coupon to save a certain amount off your total purchase each and every time you buy groceries. This savings isn’t limited to grocery stores – a flat-rate rewards card will apply the same cash back or miles to all of your purchases,” says Ashley Dull of CardRates.com.

However, if you’re picking a tiered rewards card with a grocery store category, they often have a limit on how much you can earn annually.

For example, American Express limits the 6% cash back rate spent at U.S. supermarkets annually on its Blue Cash Preferred Card to $6,000 in purchases (after that, it’s 1%), so be mindful of those restrictions.

Apple Card gives you cash back every day.

You also want to pick a card where rewards don’t expire, there are multiple options for redemption and you can transfer rewards between accounts. Always keep track of the terms of your credit card and compare card features vigorously before making your final selection.

How to earn the most rewards while grocery shopping

If you really want to maximize your rewards at the grocery store, stack your savings with a cash back app such as Ibotta, Fetch Rewards or Checkout 51. Your grocery store’s loyalty app is also a great way to double-dip on savings.

“By taking a few minutes to scan in your grocery receipts, a family of four can easily earn over $25 a month in rewards,” says Nermeen Ghneim of The Savvy Dollar personal finance blog.

Finally, if you’re choosing a store-branded credit card because you tend to shop at the same store all the time, make sure you pay off the balance before the billing cycle resets because store cards tend to have very high interest and fees.

“Many people know that making a habit of paying off high interest credit cards will actually have a slightly negative effect on their credit,” says Dan Gallagher, author, retired financial planner and personal finance expert at ScoreSense.com. “But some grocery credit cards are in-house credit extensions, especially the ones that are valid in-store only. The in-store-only variety does not harm your score for avoiding interest and paying balances off early, so do not fear a grocery store credit card.”

*All information about the Capital One Savor card has been collected independently by CreditCards.com and has not been reviewed by the issuer. 

Source: creditcards.com