Your credit score is one of the most important numbers that can affect your financial health.

This single number determines what types of rates you will qualify for when you are applying for home loans, auto loans, credit cards, etc.

You’ve probably noticed that there are many different types of credit scoring models that exist, and naturally you might have some questions about them. What do the different numbers mean, and why are they different? And does it matter that you’re seeing different credit scores reported by different credit monitoring services or different credit bureaus?

It is quite normal for these scores to vary to some degree between the three major bureaus. The reason being, lenders decide which pieces of information regarding their client accounts that they want to report to the credit bureaus, and in some cases they might not report anything at all to a particular credit bureau. And because your FICO scores changes depending on the accounts being reported, you’re probably not going to see the same score being reported from every single credit bureau. With that said, there can be more reasons why your scores are different from bureau to bureau, and we’ll take a look at those later.

Most credit scoring models are going to be similar in the types of information they use to determine your credit score, but they use that information in slightly different ways. This means that if you have a history of making on time payments, maintain a relatively low credit utilization, and you aren’t continually applying for new credit and taking out loans or obtaining new credit cards, then you should generally have a good credit score no matter which bureau is reporting it, or which credit scoring model is being used.

The largest credit scoring model: FICO

It used to be the case that banks and lenders used their own proprietary versions of credit scoring models in order to determine your level of risk as a borrower. Because of this, consumer scores were significantly different with each bank or lender, because each decision was based on the individual bank or lender’s ability to properly assess your risk as a borrower.

In an attempt to standardize the credit scoring industry, the Fair Isaac Corporation created the first multi purpose consumer credit scoring model called FICO. This new scoring model would take into account various pieces of information from your credit report, and combines it into a single score.

In modern times, FICO is still around - and they feature nearly 30 different types of credit scores which are specifically designed for different purposes such as evaluating consumer risk for things like: credit cards, mortgages, and auto loan decisions.

What about other types of credit scores?

Today, FICO scores are still just one of many different credit scoring models. There are more than a dozen other types of consumer and business credit score models being used by banks, lenders, and credit bureaus.

Another very popular scoring model you have likely come across before is called VantageScore. In 2006, the three main credit bureaus (Experian, Equifax, and TransUnion) collaborated in order to develop an independently managed company called VantageScore Solutions. This company just recently released their latest credit scoring model, called VantageScore 4.0. It is their fourth rendition of their credit scoring model, although VantageScore 3.0 is also still very popular and used across the industry today.

Common Question

Will lenders adopt VantageScore 4.0?

Starting in the fall of 2018, VantageScore 4.0 became available for lenders - but that doesn’t mean that every lender started using it. It takes time for a lender to use a new scoring model, and there is no guarantee that they will adopt VantageScore 4.0 at all. Some lenders don’t utilize VantageScore at all for any of their loans or credit products. Then there are companies like Fannie Mae which still strictly use FICO scores, and it’s often the older FICO score versions which are used for purposes such as underwriting mortgages.

Why aren’t all my credit scores the same at each bureau?

You may see different credit scores being reported by Equifax, TransUnion, and Experian - and there can be many reasons why. Some of the most likely reasons are:

  1. Scores are created using different credit reports. There are some lenders who report to only one or two of the major credit reporting bureaus, whereas there are some who report to all three. Therefore, a credit bureau might not have the same exact information as another bureau.

  2. Different models are used to calculate scores. There are many types of credit scoring models that can change your score, and it depends on which scoring model is being used to generate your score.

  3. Different timelines for pulling your data. Your scores can change at any moment, so make sure you are looking at and comparing scores from the same date.

It’s a good idea to regularly review your credit report and look for errors. Errors can be costly by lowering your credit score and raising your interest rates, so it’s a good idea to enroll in a credit monitoring service that alerts you any time a change is detected in your credit report.

Why aren’t my FICO scores the same?

Remember, there are dozens of credit scoring models out there, and none of them are exactly the same. FICO releases updates to their scoring model on a regular basis, so it will produce multiple FICO scores. Each score is created to target a specific type of lending situation, such as home loan lenders or car dealerships, so again it depends on which specific scoring model is being used.

For example, if you have ever defaulted on an auto loan or made a late payment on your car, then your auto-specific FICO score will most likely place extra significance on these specific factors. Your normal FICO score will also go down because of a missed loan payment or repossession, but it might be weighted differently.

Credit score ranges

A credit score is essentially your report card on how creditworthy you are. Amongst the different scoring models, you’ll see that most range between 300 and 850 points.

A higher score is always better.

If your FICO score is above 800, that is like getting an “A” on your report card. A “C” is roughly 695, and is the average FICO score in the United States.

Above 600 is "fair", and anything below 600 would be considered poor credit. The most detrimental items on your credit report that will lower your score is collections, charge offs, late payments, and high credit utilization. If you have a history of making regular, on time payments to all of your accounts, you should generally have a good credit score.

What is the best type of credit scoring model?

Every credit scoring model is different, and each lender uses them for different purposes. So there is not really a “best” and a “worst” type of score. However, FICO scores are very important, and are relied upon in the majority of US lending decisions.

Conclusion

If you’re trying to gauge your credit score, checking either your FICO score or your VantageScore is going to be a pretty good indicator of your overall credit health. If you’re trying to improve your credit, each score will grow as you make positive changes such as paying down your debt. As long as your score is going up, no matter which model you are using, you’re moving in the right direction! If you’re having trouble applying for credit, it’s probably a good idea to take a look at your FICO score since it’s more widely used by lenders than your VantageScore.

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