How Many Credit Scores Do You have?

Do you know you have lots of credit scores? You do, and different lenders use different scores to determine your credit worthiness. Your credit score is a number determined by ranking items on your credit record and then taking those rankings to calculate your credit score. Complicating things is that each of the three major credit reporting agencies (Transunion, Experian, and Equifax) use slightly different criteria when computing your credit score. So, to start, you have 3 different credit scores. But, those credit scores are based on information from Fair Isaac Corporation and is known as your FICO score. But, the credit reporting agencies pay FICO for credit scores and in 2012 created a competing credit score called Vantage. As with FICO, each agency uses slightly different criteria so you have different Vantage scores with each agency. That brings the total number of credit scores to 6.

Both FICO 8, the most common score from FICO and Vantage scores calculate credit scores on a scale of 300 to 850. Both models return similar but not identical credit scores.

More Credit Scores

Other companies provide credit scores too, but the most popular are FICO and Vantage. However, FICO has at least 49 different scores according to the Consumer Financial Protection Bureau (CFBP). They include older versions of FICO and some industry specific scores.

The newest FICO score is FICO 9, but the one used by most lenders is FICO 8. Even with so many different credit scores, the key to a good credit score is that consumers manage their credit responsibly – for Vantage and FICO scores this means:

  • All bills are paid on time
  • Credit card balances are low – less than one-third of available credit.
  • New lines of credit are opened only when needed

Authorized Use of Credit Cards

Some people think that by becoming an authorized user (AU) of someone else’s credit card they can quickly improve their credit score. And, being an authorized user does help, though if someone has many negative marks and excessive inquiries the help will not be drastic.

Take Away

  1. Consumers have more than one credit score
  2. FICO is owned and operated by the Fair Isaac Corporation. FICO provides many scores, some are industry specific.
  3. The three largest credit reporting companies developed vantage scores. Vantage and FICO scores both use a 300 to 850-point score. They parallel each other and the higher the score the better you are as a credit risk. Higher scoring consumers get more favorable loan terms.
  4. FICO 9 is the newest iteration of the FICO credit scores, yet FICO 8 is the most popular.
  5. Being an AU helps with credit scores, how much depends on what’s on your credit report already.

Sources:

https://www.myfico.com/credit-education/credit-score-versions/

https://www.myfico.com/credit-education/fico-score-8-and-multiple-versions-of-fico-scores/

https://blog.credit.com/2015/04/how-many-fico-scores-are-there-114574/

https://money.cnn.com/2012/08/28/pf/fico-credit-scores/