If you’re a consumer in the United States who has a credit history, then you probably have a credit score. More than one, in fact.
FICO® Scores are far and away the most widely used — 90% of lenders rely on them to assess a borrower’s creditworthiness. That said, there’s no single credit score that matters the most. Lenders can and do use a variety of credit scores to determine whether to approve your application for credit and what terms to offer you. Whether you’re looking to make a major purchase or focused on building up your credit profile, it’s a good idea to understand the different types of credit scores out there and how to keep tabs on yours.
Key Points
• FICO Scores are preferred by 90% of lenders, while VantageScores are often free on online platforms.
• Payment history significantly affects credit scores, comprising 35% of FICO Scores.
• Credit utilization, making up 30% of FICO Scores, should remain below 30%.
• Consumers can check scores via credit card statements, free websites, or credit bureaus.
• Regular credit report reviews help maintain financial health by correcting inaccuracies.
Types of Credit Scores
You may have noticed that your credit score varies depending on which website you visit. That’s perfectly normal. As we mentioned, anyone with a credit history probably has more than one score.
One reason for this is that the three main credit bureaus — Equifax, Experian, and TransUnion — may each receive slightly different information from lenders. As a result, your score could vary by bureau.
In addition, there are multiple different ways to calculate a credit score based on the information available. That’s why there’s sometimes a gap between your VantageScore® vs. FICO scores.
This can be an important difference to understand, since Vantage scores are often the credit scores available for free through online platforms. You may sometimes see one credit score (your VantageScore) when you get a free credit report, but then be surprised to learn, when you apply for a credit card or loan, that your FICO Score is different.
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How FICO Works
Generally speaking, your FICO Score is calculated based on the following factors and their relative weights:
• Payment history (35%). This reflects how often you’ve made on-time payments on your debt. Late or missed payments or accounts sent to collections can negatively impact your score.
• Amounts owed (30%). This is your credit utilization ratio, or the amount of available credit that you’re using. Ideally, aim to keep this ratio below 30%.
• Length of credit history (15%). This looks at the average length of your credit accounts. Typically, a longer history is a sign to lenders that you have more experience successfully managing your debt.
• New credit requests (10%). When you open a credit account, the lender may do a “hard” credit inquiry, which could cause your score to temporarily drop.
• Credit mix (10%). This refers to the mix of credit types in your portfolio, which may include credit cards, car loans, or other types of credit.
How Experian Works
As one of the three main credit reporting bureaus in the U.S., Experian collects information about your credit accounts and payment history and includes those details in your Experian credit report.
The bureau does make it possible for you to access your FICO Score for free, though it also offers a paid service that provides credit score monitoring for all three bureaus.
How Equifax Works
Equifax is another U.S. credit reporting agency that offers similar services to Experian.
Again, while you’ll likely have a credit report from both Equifax and Experian, the scores may differ slightly based on the information each bureau has collected. It’s worth noting that Equifax also allows you monthly access to your VantageScore credit score based on the agency’s data.
Which Credit Score Bureau Is Best?
There’s no one “best” credit score bureau. All three bureaus collect consumer information and produce credit scores.
When you want to look at your credit report, it’s a good idea to request a copy from each of the bureaus. That’s because lenders may choose to pull your credit report from any one — or all — of them. By checking all three scores, you can be aware of negative information that affects your credit score and have a chance to correct any inaccuracies you see.
Recommended: Why Does Creditworthiness Matter?
How Can You Obtain Your Credit Score?
You have several options when it comes to accessing your credit score. You may be able to see it on your credit card statements or when you bank online. You can use free credit score websites or purchase your score from a credit bureau.
MyFICO offers a free service that allows you to check your FICO Score and receive your Equifax credit report each month. (You can also pay for a plan that includes three-bureau credit report access, identity theft insurance, and more.)
Another avenue to consider: A spending app, which often offers credit scores. Unless otherwise indicated, you’ll likely be seeing your VantageScore credit score.
Remember, credit scores update every 30 to 45 days, so it’s a good idea to check yours every so often.
How Can You Obtain Your Credit Reports?
While your three-digit score is a great way to see how your credit is faring, the best way to fully understand everything in your credit history is to read the full credit report. If you see any information that looks suspicious or incorrect, you can file a dispute directly with the credit bureau to have it removed.
Every American is entitled by law to pull their credit reports from all three bureaus for free once a week via AnnualCreditReport.
What Is a Good Credit Score Range?
FICO Scores range from a low of 300 to a maximum of 850. (That’s right: The starting credit score is not zero.) Here’s how FICO categorizes scores:
• 300 to 579: Poor
• 580 to 669: Fair
• 670 to 739: Good
• 740 to 799: Very good
• 800-850: Exceptional
If your score is lower than you’d like, be aware that it can take some time to build credit.
One great way to build your credit is to try to lower your overall credit card utilization. This means paying down your debt, particularly balances on revolving debt. And because on-time payments count for such a heavy part of the score, keeping up with your bills each and every month can also be a big help.
Finally, try not to sweat every fluctuation. Sometimes, filing a dispute or multiple hard inquiries in a short time frame can ding your score, but those dips tend to be temporary.
The Takeaway
If you have a credit history, then you likely have more than one credit score. So which credit score matters the most? Short answer: Whatever score the lender uses when considering your application for credit. Generally, FICO Scores are used in most decisions, though each lender has its own policies around which scoring model and version to use.
Regardless of the scoring model, staying on top of your bills, paying down debt, and regularly reviewing your credit report can help ensure you’re on firm financial footing.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
FAQ
Is FICO or TransUnion more accurate?
FICO and TransUnion serve different purposes. FICO is a credit scoring model that uses a proprietary algorithm to calculate credit scores. TransUnion is one of the three major credit reporting bureaus in the United States that collects credit information about consumers from lenders and creates credit reports.
Do lenders look at FICO or TransUnion?
What a lender reviews — whether it’s just your credit score (like your FICO Score) or your complete credit report (like from TransUnion) — usually depends on the type of credit you’re applying for. For smaller lines of credit, like a credit card, they may only check your score. But for larger loans, like a mortgage, they’re more likely to dig into your full credit history.
Why is my FICO score 100 points lower than Credit Karma?
Credit Karma provides its users free access to their Vantage Score, which is calculated using a different algorithm than the FICO Score. If your score on Credit Karma is different from your FICO Score, it’s likely because of the different calculations.
What is a good FICO score?
According to FICO, a “good” credit score falls between 670 to 739. Credit between 740 to 799 is considered “very good,” while credit scores of 800 and above are considered “exceptional.”
Do lenders use FICO or Vantage?
The majority of U.S. lenders use FICO Scores to assess a potential borrower’s creditworthiness. However, a VantageScore is what you’re more likely to see on many web platforms that offer free credit scores.
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