At the moment I'm writing this, my credit score is somewhere in the mid 700s, currently up 5 points from last month. No, wait. It's down 18 points. Oh, and it just went up by 7 points, too. Actually, scratch that—it's in the high 700s and hasn't budged at all in the last few months. So, my score could be considered "good," "very good," or downright "excellent." By one metric, it could be just a few points shy of "exceptional."
I'm not making up these scenarios. Every single one of them is true and represents my actual credit scores. Yes, that's scores, plural. The truth is, we all have dozens of credit scores and there are many ways to get them— from educational websites, financial institutions, and credit reporting bureaus like Experian.
But is any one score better or more important than the others? Is there one "right" credit score?
A Credit Score by Any Other Name
The world of credit scores can be complicated and hard to follow. Couple that with the importance of credit scores—frequently touted as magical numbers that serve as the key to your financial life—and you can work yourself into a tailspin trying to access them, decipher them and, most importantly, figure out how to get the most out of them.
The key is not to get hung up on any one credit score. Instead, it's more important to look at the range your credit score falls in, the variety of scores out there, and the principles used to create them. Credit scores are derived from complex mathematical formulas that look at the information in your credit reports and generate a number designed to communicate the likelihood that you're going to pay your bills on time.
Different credit scoring models weigh this information slightly differently, which is why we each have so many different scores. The existence of multiple credit scores allows lenders to develop scores to address specific needs, such as consumers who don't have a deep credit history. We'll explain more about how credit scores work a little bit later in the article.
For this story, I checked nine different places for my credit score, which I was able to pull either for free or a small fee.
The result? Twelve different scores (two services offered me multiple scores based on information from different credit bureaus). There were only two numbers that appeared more than once; the rest of the scores were all unique. Right now, if you asked me what my credit score is, I could truthfully tell you it's 777. I could also say 745. Both numbers are correct.
So What Exactly Is a Credit Score?
A credit score is a three-digit number that's calculated by applying a mathematical algorithm to the information in one of your three credit reports, which are generally updated each month.
Generally, the higher your credit score, the more likely you are to receive favorable terms on a loan, like lower interest rates and higher dollar limits. That can translate to significant money over time, especially on big-ticket purchases like a home, where a slightly lower interest rate can save you thousands of dollars over the life of your mortgage. Higher credit scores also qualify you for the best deals on credit cards and other personal loans.
But, as you may have surmised from my list of varying credit scores, you don't just have one. In fact, you likely have dozens of credit scores, if not hundreds or even thousands. That's because there is no uniform algorithm employed by all lenders or other financial companies to compute credit the scores.
"There is no one score," says Veronica Herrera, director of product solutions at Experian. "There are hundreds of different scoring models used by lenders. And there are thousands more custom scores."
Custom scores are based on specialized risk algorithms tailored to a specific lender for a specific purpose, like auto loans. A custom scoring model may place more or less weight on certain factors based on the type of credit that will be extended and the potential risks associated with it.
Your credit history is maintained in reports at three different credit bureaus: TransUnion, Equifax, and Experian, my employer and the publisher of this blog. Because all lenders don't always report information to each bureau, the same scoring model using the data from one credit bureau could yield a different score when using data from another credit bureau.
There's an important distinction you should know as well—the credit reporting companies are not the entities that make loan and credit decisions. If you have credit denied or are approved for a higher interest rate than desired, that's because a specific lender or creditor reviewed various criteria such as your credit scores, information from your credit report (such as your past payment history), and other factors not included in your credit report (such as your income), and then decided not to extend you additional credit. Learn more here about how information gets on your credit report here.
What is a FICO® Score?
While there are multiple scoring models out there, one of the most frequently used by lenders and other businesses is known as the FICO® Score, whose scale ranges between 300 and 850. (Most scoring models use a similar scale, though some go as low as 250 and as high as 900.) But even FICO® Scores can vary, because there are several versions of the FICO scoring model. The most widely used FICO® version is FICO® 8, while the most recent one is FICO® 9.
One other commonly used credit score is the VantageScore, which is based on a scoring model developed in 2006 by the three major consumer credit reporting companies--Experian, Equifax and TransUnion. The most recent versions are VantageScore 3.0, the most widely used version at Experian, and the newly introduced VantageScore 4.0, which are both also based on a 300 to 850 scale.
Where Can You Find Your Credit Scores?
Checking your credit scores has never been easier than it is today. In fact, you likely already have free access to some of your credit scores. When I was seeking my credit scores, I started with the credit cards in my wallet.
Every single one of my card issuers offered me access to some version of my credit score for free. I figured this was a good place to begin, considering these banks already had access to my sensitive financial data.
My Capital One card provided a service called CreditWise, which showed a VantageScore 3.0 score calculated from information on my TransUnion credit report. Citi showed me a FICO® 8 score based on data from Equifax, while American Express displayed a FICO 8 calculated using information from my Experian credit report. Discover, Chase and Barclays also offered similar services.
Next, I checked Mint.com, which is money management website I use to track my financial accounts. Mint offered me a free VantageScore 3.0 as well, based on data from my TransUnion report. I also remembered that years ago, I had signed up for an account at Credit Karma, a website that offers free credit scores for educational purposes. I logged in and it updated my information, yielding the same VantageScore 3.0 also based on TransUnion data. The number produced by Mint and Credit Karma was the same, which makes sense because they both employ the same scoring model using data from the same credit bureau.
Finally, I am also a premium member of Experian IdentityWorks, which includes quarterly access to my credit reports at all three bureaus and the FICO® 8 Scores calculated from them, in addition to credit score tracking over time. I was able to see my three FICO® 8 Scores based on data from each credit bureau. (For the record, the three scores from each different bureau were very close, but not exactly the same. It reminded me to examine my credit reports more closely to see where the discrepancies might come from.)
The bottom line is that you can find your credit scores four ways:
- By checking if your credit card issuer or other lender might offer it for free.
- By visiting a free credit scoring website like freecreditscore.com.
- By purchasing your score from one of the three consumer credit reporting agencies, like Experian, or directly from credit scoring company FICO®.
- By visiting a nonprofit credit counselor, who might be able to pull your score for free and go over what it means. (Find one through the National Foundation for Credit Counseling.)
How Do You Make Sense of Multiple Credit Scores?
If there isn't one credit score to rule them all, what's the point of even looking them up? And if some banks and lenders develop their own custom scoring models, isn't seeking your credit scores a futile exercise?
"Checking one score and getting too attached to that number is not practical," says Herrera. But looking at a few multiple scores is a smart exercise in order to understand how your credit is doing.
"Most credit scoring models do the same thing—assess risk. Each model approaches it in a slightly different way. But the variables that go into predicting default behaviors are all similar: ‘Have you been late on your bills before? Are you late frequently? Is your credit utilization high?,'" she explains. "Most credit models do a decent job of predicting risk. So when you get a score that tells you you're high risk or low risk, generally other scores will do the same."
That was evident by all the credit scores I pulled. Notably, with one exception, none of the scores generated by either the credit card issuers, the free services or Experian IdentityWorks yielded exactly the same number. But all the scores came with some context about what the numbers meant, including a scale that consisted of four to six bands divided up into categories that were all some variation of the following: exceptional, very good, good, fair, poor.
My scores consistently fell into the second-highest category of credit, though many services had different names for the same bands.
That's key, says Barry Paperno, a consumer credit expert who has worked for both FICO and Experian.
Because we all have so many credit scores in our name, there is no point in chasing every single one down—because you likely don't even have access to most of them. Instead, it's smarter to look at a few and compare the results.
"Do your scores vacillate wildly?" asks Paperno. If they do, that could be a red flag that something is off on one of your credit reports. But if your scores generally fall in the same range, then you should have a good sense of how you're doing
And when you are looking at your scores and how they've changed, check if they go up or down in a similar direction.
"What makes one score go up vs. down is always going to be the same—it just depends on the degree," says Paperno.
Most services that provide you with your score offer context on what the number means and why it falls in the range it does, Paperno notes. Pay attention to the factors that are dragging your score down. They should be relatively similar across all the numbers you pull. If they're not, that could be an indication that there's something awry on one of your credit reports, which you should follow up on.
How Do You Improve Your Credit Scores?
Once you know generally how your scores fare, you might want to take steps to improve your credit standings. Herrera and Paperno both agree on how to accomplish that: Look at the factors bringing your scores down, and do the opposite.
That means if you've had a late payment, focus on establishing a long-term pattern of paying bills on time. If you have too many inquiries, hold off on applying for new credit. If your credit utilization is too high, pay down some of your debt. (Click here for a comprehensive review of the various factors that can impact your credit scores.)
Paperno adds that if you're planning in the near future to apply for a big loan, like a mortgage or auto loan, you'll want to pay close attention to your scores. This is especially important if your scores are in one category, like "good," but may be just a few points shy of getting moved into the next echelon higher. Mortgage lenders use scores from each bureau, so you should check all three reports. Once you know your scores, you can spend some time in the months before your loan application taking steps to improve your scores as much as possible in order to secure the best loan terms.
But if you're simply monitoring your score or rebuilding credit, it's a good practice to check a different credit report every four months. You're entitled to a free report from each bureau once a year from AnnualCreditReport.com, so rotating which report you check every four months will allow you to get through all three reports in one year.
Monitoring your credit scores is also a smart move. If you see a big change in one of your scores, that's a good sign to investigate the reason and pay attention to what's happening on your credit reports. You can also get a free copy of your Experian credit report here on Experian.com.
As for my own credit scores, they're in pretty good shape. But regardless of the varying numbers, they all fall into the second-highest possible tier of scores. That's something that irks my competitive nature, so now that I'm armed with the knowledge of what's keeping them from being perfect, I've already planned my strategy to bring the numbers up. For me, that means bringing my credit utilization down and making sure I never miss a bill again. The strategy is working—I checked all my scores again, and a few have already inched up. I'll take that as a win.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer, or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.