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Once you understand what a credit score is and how credit scoring models work, you'll realize that you could have dozens―or even hundreds―of different credit scores. While others talk about their credit score being 640 or 750, you'll know that the underlying information in your credit report is what matters most. But why do you have so many credit scores? Read on to find out.
Why Are There So Many Different Credit Scores?
Credit scores come from complex mathematical models—credit scoring models—that analyze the information in a consumer credit report to calculate a score.
FICO and VantageScore® are two of the most well-known companies that create scoring models. Each company develops multiple scoring models; some for general use and others for specific industries. There's no singular "real" or "correct" score: Lenders can choose which score (or scores) they want to use to help them make decisions.
FICO and VantageScore regularly create and release new versions of their scoring models as analytical techniques advance and consumer behaviors change. These updated models allow for more accurate predictions of risk to lenders, creditors and others. FICO also creates different types of credit scores for specific purposes, such as a score for lenders that offer auto loans.
One reason there are so many credit scores is that there are many different scoring models. In total, VantageScore has four versions of its credit scoring models and FICO has more than 40 scoring models. But that's not the only reason you might see different scores when you check your credit scores.
In addition to all these credit scoring models, there are three credit reports—one each from Experian, TransUnion or Equifax—that scoring models can use to calculate your score. Lenders don't always report information to all three bureaus, however, which means there are often differences among your credit reports (and the scores based upon them).
Because your credit reports can differ, your scores are unlikely to be the same. Your credit scores are determined solely by the information in your credit reports and if that information is different across your reports, your credit scores will also be different. That's true even if the same scoring model analyzes all three of your reports.
What Exactly Is a Credit Score?
A credit score gives lenders an easy way to understand risk. Many consumer risk scoring models try to predict the likelihood that someone will miss a payment by at least 90 days in the next 24 months.
Creditors could try to analyze your credit report to come up with their own prediction, and some creditors do create their own custom scores. However, many creditors use a FICO® Score☉ or VantageScore credit score to help them quickly and objectively make decisions.
Generally, the higher your credit score, the more likely you are to receive favorable terms on a loan, like lower interest rates and fees. 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.
What Is a FICO® Score?
FICO® Scores are used by 90% of top lenders, and the most widely used versions are the FICO® Score 8 (released in 2009) and FICO® Score 9 (released in 2014). In 2020, FICO also released the FICO 10 Suite. It takes time for creditors to test and adopt new scoring models, however, which is why you may not be familiar with newer models. FICO calls these scores base FICO® Scores. On top of the base score, the company also develops industry-specific auto and credit card scores: the FICO Bankcard Score and FICO Auto Score.
For example, a FICO® Score 10 could help any type of creditor predict the likelihood that a borrower will fall behind on any type of bill. Meanwhile, the FICO Auto Score 10 is designed specifically for auto dealers and lenders to help them more accurately predict the likelihood that a borrower will fall behind on an auto loan.
FICO's base credit scores range from 300 to 850, while the industry-specific scores have a larger 250-to-900 score range. In either case, a higher score is better.
The most recent versions of VantageScore's credit scores, the VantageScore 3.0 and VantageScore 4.0, also range from 300 to 850. According to VantageScore, over 3,000 financial institutions, including nine of the 10 largest banks, use VantageScore's credit scores.
Where to Check Your Credit Scores
It's fairly easy to find a free way to check one of your credit scores today, but you'll want to consider which credit score you're checking. For example, with Experian, you can get your FICO® Score 8 for free. Other organizations might offer you a different type of credit score, a credit score based on one of your other credit reports or a proprietary score that doesn't necessarily line up with the scores that creditors commonly use.
You can find out if the companies, banks, credit unions, personal financing websites and budgeting apps you currently use offer a free FICO® Score or VantageScore credit score by reviewing your accounts' benefits. You can also check the FICO and VantageScore websites, which list the organizations that offer customers free access to their credit scores.
How Do You Make Sense of Different Credit Scores?
To quickly recap: You have three credit reports and there are many different credit scoring models that can score each of your reports. As a result, you could have hundreds of different credit scores depending on which report and scoring model is used.
Lenders can choose which credit report and score to use when making a lending decision, which means no single scoring model is more important than all others.
If you want to check your credit score before applying for credit, you could ask the creditor which credit report and score it will use. But keep in mind that credit scoring models tend to consider the same general factors—such as payment history, credit utilization ratio and length of credit history—to calculate a score. So a better (and less frustrating) approach may be to focus on improving those factors rather than a particular score.
How to Improve Your Credit Scores
Although the differences in scoring models and reports lead to different scores, all these scoring models use the same credit report data to predict risk. If you can improve your credit by focusing on what's in your credit report, you may see all your scores rise at the same time. You may be able to do this if you:
- Pay your bills on time. Having several credit accounts with a long history of on-time payments can help you achieve a good credit score, and missing a payment or having an account sent to collections can hurt your scores. Late payments can stay on your credit report for up to seven years, although the impact they'll have on your scores will diminish over time.
- Don't max out your credit cards. Your credit cards' balances compared to their credit limits—your credit utilization ratio—can be an important scoring factor. Try to only use a small portion of your credit limit and then pay the bill in full to avoid interest charges. If you regularly use your credit card, you can also make early payments before the end of each billing cycle to lower your balance and utilization ratio.
- Use different types of credit. Show that you can responsibly manage different types of credit accounts by having revolving and installment credit accounts, such as a credit card and loan.
- Strategically apply for new credit. Credit applications can lead to hard inquiries, which may hurt your credit scores a little. The impact is often minimal and diminishes with time, and you won't be penalized if you're shopping for certain types of loans and submit multiple applications to compare offers in a short time period. But still consider what accounts you might want to apply for in the coming months and how each new application might affect your credit.
- Add new on-time payments to your credit report. You can now use features like Experian Boost®ø to add different types of accounts—and your history of on-time payments—to your credit report without opening a new loan or credit card. Connect your account and see if you can boost your credit score with your utility, phone, streaming service and rent payments.
If you're having trouble affording your bills, contact your creditors to see if they have any hardship plans. Asking early could be better than missing a payment, having to pay fees and winding up with a past-due account in your credit report. If you're already behind, try to bring your accounts current or contact a nonprofit credit counseling organization to ask for advice.
Monitor Your Credit Reports
Knowing that all your credit scores will depend on your credit report, you may want to regularly check—and continually monitor—your credit report for changes. Experian offers free credit report monitoring with notifications when there's a new inquiry, account, public record or personal information update in your Experian credit report. You also receive an updated Experian credit report every 30 days when you sign into your account, a FICO® Score and a breakdown of the scoring factors that currently have the greatest impact on the score.