Every consumer has multiple credit scores. Why on earth is that? Because the major credit bureaus — Experian, Equifax, and TransUnion — may have slightly different credit information on any one person, and credit scoring models vary.
Credit scores are an important financial metric to keep track of throughout the year. The three-digit number can help people qualify for everything from mortgages to student loans and apartment rentals.
Here’s why credit scores vary and how to keep track of each.
What Is a Credit Score?
A credit score is a three-digit number assigned to each consumer that businesses use to measure the risk of lending to that person. It’s not the only thing lenders consider, but it is one of the most important metrics, if not the most important.
Your credit score is based on a bunch of factors, including if you typically pay your bills on time, what your debt is relative to your income, how long you’ve carried credit, how many loans or lines of credit you have at once, and if you have ever had a negative financial event, including bankruptcy.
Recommended: What Is Considered a Bad Credit Score?
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Credit Scoring Models Vary
Though there are a number of credit scoring models out there, the majority of lenders use either FICO® or VantageScore.® Both determine a person’s credit score using the factors above, including history of borrowing, repayment history, and how much of the consumer’s credit they are currently using (known as a utilization rate).
Though both use the same factors, each one uses its own formula to weigh the worth of each factor. For example, a person’s credit history may be more important in one model than the other.
Based on the information gathered, the scoring models assign each consumer a three-digit number, which denotes that person’s lending risk compared to others.
To complicate matters, there are often multiple versions of each scoring model available from its developer at any given time. And adoption rates for updated versions can be low, meaning some lenders may be using older models that calculate a person’s score differently than an updated version. But for now, the FICO scoring model (known as FICO 8) breaks down as follows:
• Payment history: 35%
• Amounts owed: 30%
• Length of credit history: 15%
• Credit mix: 10%
• New credit: 10%
Scoring Ranges Vary, Too
Both FICO and VantageScore calculate credit scores in a range between 300 to 850.
VantageScore 3.0 and FICO 8 are the most used scoring models and frequently mirror each other, so if your FICO number is high then your VantageScore will likely be high as well.
However, it’s important to note that the two pull the same data but weigh that individual data differently, putting greater importance on some aspects of a person’s credit history and usage than others.
While all creditors and lenders have their own standards, here are the FICO and VantageScore credit score categories:
FICO:
• Exceptional: 800 to 850
• Very good: 740 to 799
• Good: 670 to 739
• Fair: 580 to 669
• Very poor: 300 to 579
VantageScore:
• Excellent: 781 to 850
• Good: 661 to 780
• Fair: 601 to 660
• Poor: 500 to 600
• Very poor: 300 to 499
To put it all into perspective, in 2022, the average FICO credit score hit 714. Minnesotans reigned supreme for the 11th straight year with an average of 742.
Report Data Can Differ From Bureau to Bureau
Each of the credit bureaus collects its own data independently, and some lenders may only report data to one or two of the credit bureaus rather than all three.
To add to the complexity, the bureaus usually do not share information with one another, so none can really promise to show a consumer’s total financial picture.
Say Joanna goes into collection for her car loan, but the lender only reports this information to Experian. That means it will likely only appear on and affect her Experian credit report and may not affect her TransUnion or Equifax report. Thus her Experian report could be lower than her other two credit reports.
Scores Can Change Depending on the Lender
Lenders typically build their own relationships over time with at least one of the credit bureaus. This means they may only report information to the credit agencies they have relationships with.
Before applying for a line of credit, a car, home or student loan, or any other credit, it may be prudent to ask the lender which agencies they share information with and check in with those to see where you stand.
How Often Should You Check Your Credit?
Here’s the good news: Checking your credit won’t hurt your credit score, so go ahead and keep an eye on it. The bad news? The number a person sees when checking their score for free likely won’t match the one any lenders do.
The report a consumer has access to is a simple free report, lacking detail. But again, that’s OK, because it will show any errors or possible identity theft, which can be corrected if caught early enough.
Anyone can order a copy of their credit report from all three reporting agencies once a year for free at AnnualCreditReport.com . The report breaks down a person’s credit history but does not give a score.
However, again, this is the time to look for any mistakes and amend them ASAP. Consumers who do see an error can dispute it with the credit reporting agency and the company that holds the account.
It’s also a good idea for people to periodically check their credit to ensure it’s on the up and up.
Those interested in improving their credit scores to potentially get a better rate on loans should pay all their bills on time, limit their credit utilization ratio, and pay down existing debt.
The Takeaway
An individual’s credit scores differ for a variety of reasons. It might be a good idea to ask lenders which agencies they share information with. It’s always a good idea to periodically check your credit report to make sure everything’s kosher, to pay bills on time, and to keep credit utilization low.
Know what’s cooler than keeping track of your credit score? Keeping track of your credit score and finances at once. If you’re on the market for a money tracker tool that will let you do both, SoFi may be just the thing.
SoFi tracks all of your money in one app — at no cost. And SoFi members can work one-on-one with a financial advisor at no charge.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
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Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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