For the problem of small waveplate’s error tolerance in practical applications, which leads to instability of scale factor, a novel way of compensating scale factor is presented, which increases the error tolerances, thus efficiently increases stability of scale factor of fiber optic current transducer. Through theoretical analysis, the paper presents the theoretical model of λ/4 waveplate, and analyzes the accuracies of 0.2% and 0.01% of scale factor, which requires the tolerances of orientation error and retardation error. After peak -divide way applied to compensate, the results show that, compared with uncompensated system, for the accuracy of 0.2％ and 0.01％ of scale factor, the tolerances of orientation error and retardation error increase about 4.7 times and 11 times respectively. Thus, stability of scale factor also increases 4.7 times and 11 times respectively for the two different accuracies, and those also show that the higher accuracy, the more obvious compensation effect. Applied peak-divide way efficiently decreases the instability of scale factor which brings in measured error.