You received your credit score: Do you know which one?
Many agencies offer a free credit score.
However, did you know that these scores might not be the scores a lender is using?
In fact, besides the three Fair Isaac Corp. credit scores, an additional six are used widely.
FICO developed the credit score most lenders use to determine your credit worthiness. Each of the three major credit bureaus (Equifax, Experian and TransUnion) have a FICO score for you.
The calculation they use is the same, but sometimes they don’t all have the same information, so your credit score may vary slightly among the three. A consumer’s FICO score will range from 300 to 850.
Each of the three credit bureaus also has its own credit scoring model. Lenders don’t use these, but they are educational for consumers. The credit bureaus use credit information in the specific credit report to determine the score. Here are the credit score ranges for each of these credit bureaus:
– Equifax: Equifax Credit Score – 280 to 850
– Experian: PLUS Score – 330 to 830
– TransUnion: TransRisk New Account Score – 300 to 850
The three major credit bureaus also jointly created the VantageScore credit scoring model. An independent company manages and maintains it. Some lenders may use the VantageScore in determining someone’s credit worthiness.
VantageScore has three versions: VantageScore 1.0 and 2.0, which use a score range of 501 to 990, and VantageScore 3.0, which uses a range of 300 to 850.
To add to the confusion, even more scores are available to consumers. They include the CE Score, Credit Optics Score, CoreLogic and RiskView. Just because lenders don’t use these scores doesn’t mean they can’t be helpful. If you use one of these scores or a service that provides you with one of these scores, it can be a useful monitoring tool. These services use information in your credit report to calculate your score.
By using one of these and continuing to monitor your score, you can see how you’re doing using a big picture. If you score drops significantly and you don’t know why, it can be an indication of an error on your report. If you have a goal to increase your credit score to qualify for a loan in the future, you will be able to see if your score is increasing.
Source: Carrie Johnson, NDSU Extension personal and family finance specialist, 231-8593, firstname.lastname@example.org