Methods and systems are provided for estimating an actual compression ratio of an engine cylinder based on the electric current applied to an actuator of the associated variable compression ratio mechanism. The compression ratio is estimated as a function of both a value and a location, relative to cylinder piston position, of a peak holding current applied by an electric motor on the actuator to maintain the actuator at a commanded compression ratio setting. In this way, the vehicle control system may more accurately infer the current actual compression ratio of each cylinder.