Which Credit Score Do Lenders Use?

A credit score can determine whether you get a loan and affect other aspects of your life, such as getting a job, but not all credit scores are the same. Most lenders use the same formula to calculate your credit score, but they rely on information gathered by a third party. However, there are several alternative scores lenders can consult.


As of 2010, most lenders use a credit scoring formula developed by the Fair Isaac Corp., according to Kiplinger. The FICO score is so common among lenders that credit scores are often synonymous with the FICO model. Each of the three credit reporting agencies, however, have different information and scores can vary by several dozen points.


The Fair Isaac Corp. updates the FICO formula every few years. In 2009, for example, the latest FICO version was 08 and it would give a much different score than a lender using the FICO 98 formula, according to Consumer Reports. FICO also has scores based on niche needs, such as a formula designed for lenders who specialize in car loans.


Credit rating bureaus may try to sell you their own credit scores, such as the Experian ScoreX or TransUnion TransRisk, according to credit expert Michael Bluejay. The real FICO score sold by credit rating agencies also go by different names. Equifax calls the FICO score a "BEACON," Experian the "Experian Score" and TransUnion the "EMPIRICA," according to the Fair Isaac Corp.

Creditors typically use credit reports from all three ratings agencies and consider your median score your true FICO score.

The Future of Credit Scores

All three credit bureaus -- which control almost the entire consumer credit rating industry -- started backing the VantageScore developed by these same credit bureaus in 2006, according to MSN Money Central. The VantageScore claims it gives consistent scores, while weeding out more bad borrowers than the FICO model. The FICO model, for instance, can give high scores to borrowers with a limited credit history.

As of 2010, there is not enough information to determine whether the VantageScore will supersede the FICO. Only 5.4 percent of lenders chose the VantageScore model between 2006 and 2009, according to Bankrate.

Other Alternatives

Many companies, such as Ford, use credit scoring formulas they create themselves, according to Consumer Reports. Banks sometimes purchase a credit history and calculate a score themselves. Some lenders look at scores from companies that report payments not traditionally included in credit reports, such as rent and utilities.


About the Author

Russell Huebsch has written freelance articles covering a range of topics from basketball to politics in print and online publications. He graduated from Baylor University in 2009 with a Bachelor of Arts degree in political science.