Whether you're applying for a loan or just assessing your current financial situation, there's a good chance you've wanted to know your credit score so you can see where you stand financially. Credit scores assign you a numerical value that comes from information on your credit reports, such as your types of accounts, payment trends and balances on your accounts.
If you're wondering what the difference is between a FICO score and credit score, know that a FICO score is simply one type of credit score alongside other models. It's helpful to learn about the common types of credit scores and how they differ.
Understanding Credit Score Basics
Before getting into the various types of credit scores, it helps to have a better understanding of what credit scores are, how they work and why they're so important. Although ranges can vary by credit score type, credit scores often fall somewhere between 300 and 850. The higher your score is, the better credit standing you have. Each organization generating a credit score also has a scale that determines where your credit score falls, such as whether you have poor, acceptable, good, or excellent credit.
The organizations that generate credit scores have algorithms that calculate the number based on various pieces of data they can obtain from looking at your credit report. For example, they pay particular attention to how much debt you have on accounts like credit cards, mortgages and student loans, and they'll look into whether you've paid your bills on time, missed some payments or had accounts get sent into collections. They also give weight to other factors such as how old your accounts are, whether you've applied for new credit accounts recently and what type of account mix you possess.
While the different types of credit scores have their own uses, they're important primarily since they provide information on your credit standing. You can use a credit score to determine whether you need to work on repairing your credit so that you can reach your financial goals. Lenders, on the other hand, can use credit scores to decide whether you show an ability to make payments on current and future debt, and whether you should get approved for a loan or receive credit limit increases.
Exploring the FICO Score
If you're wondering which credit score is the most commonly used and most familiar to the general public, then that would be the FICO score. Formulated by the Fair Isaac Corporation around 30 years ago, the FICO score is the credit score that most lenders use when assessing your creditworthiness. Even some other organizations, such as insurance companies, consider this score when examining your financial standing.
A FICO score usually ranges from 300 to 850, where anything 800 and over would be considered exceptional credit and anything below 580 indicates you're a risk to lenders and have a poor credit history. Fair FICO scores range from 580 to 669, and falling within this range could mean you do get approved for credit, although probably with a higher interest rate. Good FICO scores range from 670 to 739, while very good ones fall between 740 and 799. For the best chance of getting a mortgage or prestigious credit card, you'd want to at least fall within the good FICO score range.
Different versions of the FICO score exist for purposes such as mortgage approval, auto lending and basic credit assessment, and they can give different weights to considered credit report factors. However, the standard model of the FICO score assigns the highest weight to your payment history (35 percent) and amounts owed on the accounts (30 percent). Your credit history length has a moderate impact of 15 percent, while both your recent hard credit pulls and your overall credit mix get 10 percent each.
Read More: What is a FICO Score?
Learning About the VantageScore
While the FICO score remains the most widely-known credit score, the VantageScore is another popular model that lenders can use to learn about your credit usage and behavior. Rather than being formulated from a single organization, the VantageScore is a group effort of the three credit bureaus, which are Experian, Equifax and TransUnion. When it comes to comparing the differences between the FICO score and VantageScore, you'll find that you can have different numbers with the same credit report, as these models look at different credit factors and assign varying weights.
The VantageScore currently exists in versions 3.0 and 4.0 in widespread use, and the weights assigned to various credit factors aren't always exact for these models. However, payment history has the most weight (40 percent or so), while your credit utilization and age/type of credit get around 20 to 21 percent each. Recent credit balances have a weight of around 11 percent, recent credit applications get around 5 percent, and your total available credit only has a weight of around 3 percent.
Along with these differences in weights for items on your credit report, a VantageScore differs from a FICO score in that you can have a VantageScore with even less of a credit history. For example, you just need a single credit account to have a VantageScore assigned, while you'd need to wait around six months and have account activity to have a FICO score generated. The ranges also differ for the VantageScore where 300 to 499 is very poor, 500 to 600 is poor, 601 to 660 is fair, 661 to 780 is good and 780 to 850 is excellent credit.
Looking Into Bureau-Specific Scores
While the FICO and VantageScore dominate the market for credit scores, the three credit bureaus have their own models that lenders may use to make certain decisions about customers and that consumers can use for educational purposes. These custom scoring models consider similar factors as the FICO and VantageScore, but they can vary in range and may have specialized purposes as well.
For example, TransUnion has the CreditVision New Account Score 2.0 benchmark, formally known as the TransRisk score, that can provide insight into the financial strengths and weaknesses of existing customers. Unlike the FICO and VantageScore, the TransUnion score ranges from 400 to 925.
Equifax's custom credit score goes from 280 to 850 and is used only for customers to get an idea of their creditworthiness. There's also the Pinnacle score – formerly the Beacon Score – from this bureau that helps lenders with credit decisions and is based on undisclosed criteria. On the other hand, Experian assigns customers a national risk score that can range from 0 to 1,000 as well as a national equivalency score that goes from 360 to 840.
Read More: Beacon Score Vs. FICO Score
Comparing Credit Scores in Practice
When it comes to knowing your credit score for the purpose of determining whether you could be eligible for a new loan or credit card, the FICO score lenders really use can offer the best information to you as a borrower. However, keep in mind that the number you see will most likely be for the latest base model, FICO Score 8, but depending on what you're applying for, lenders could use a different version of the FICO score or a specialized version. In any case, getting your FICO score can still serve you well for educational purposes and be the most reliable option.
On the other hand, your VantageScore remains important since it's the other common score lenders consider, and it has other uses in your daily life as well. Alongside mortgage lenders, credit card companies and banks, entities such as landlords, utility companies and government agencies may all use the VantageScore. This credit score can come in handy, particularly if you don't have much in terms of established credit, as you can have an account opened for just a month and have a VantageScore calculated.
The custom bureau-specific credit scoring models are sometimes called educational scores in that they use similar criteria as a FICO score based on your credit report from the specific bureau. However, the ranges differ, and these usually aren't actual scores that a lender will see for the purpose of approving you for new credit. You can often find some educational scores online for free through financial websites. Although not official, they can still provide valuable insight into your credit standing and help guide you in making changes.
Checking Your Credit Scores
If you want to get an official FICO score, you'll need to look into certain sources, because you otherwise risk getting an educational score or VantageScore. You can get an official FICO score through the websites for myFICO, Equifax and Experian, usually for a fee, as well as through a variety of access partners that may allow customers to have access to a free FICO score. For example, some banks, credit unions and creditors that offer access include Citi, Bank of America, Barclaycard, American Eagle Financial Credit Union, Bankers' Bank, Discover and KeyPoint Credit Union.
You can get your VantageScore through banks and the credit bureaus TransUnion and Experian, as well as numerous online financial websites. For example, Credit Karma, Credit Sesame, myBankrate, NerdWallet and WalletHub are some free online providers. If you're a customer of Capital One, US Bank, Chase or OneMain Financial, you can also get your VantageScore free online through these financial institutions.
When you're simply looking for credit scores for educational purposes, you can turn to websites for the credit bureaus alongside numerous sites that offer free credit reports and scores. For example, you can use Credit.com to get an Experian-specific credit score for educational purposes. Regardless of where you find a credit score, read closely to see if it identifies the source or model as well as the range so that you have a good idea of how to interpret it.
Improving Your Credit Scores
Regardless of the credit score type and model used, if your research uncovers that you have a lower score than you'd like, then you can easily work toward improving your financial picture and getting a higher credit score. Whether you've dealt with financial issues or are building your credit from scratch, consider some of these practical steps:
- Use credit wisely: If you're just starting out and need to build credit, get started with a credit card or loan, but keep in mind what you can afford. By paying your payments on time and letting your account history age, you'll start seeing your credit score go up. Current borrowers should keep their debt levels manageable, pay more debt off when possible and avoid opening more accounts unless it's essential.
- Always pay on time: Late payments not only lead to fines, but they also easily dent your credit score and may even cause your account to be sent to a collections agency. Set reminders or automatic bill payments for at least the minimum payment to avoid these troubles.
- Keep your accounts active: If you don't use an account for a while, it may be closed. Unfortunately, that dents your score since your overall credit limit goes down alongside your average account age. So, use your accounts periodically and don't close accounts unless you have no other option.
- Monitor your credit reports: Not only does monitoring your credit reports allow you to keep an eye on changes to your accounts, but it can help you spot fraud or mistakes. You can report these issues to the credit bureaus so they don't impact your credit score in the future.
Read More: How to Quickly Improve Your Credit Score
- Investopedia: Credit Score
- NerdWallet: Why Your Credit Score Is Important
- myFICO: What Is a FICO® Score?
- myFICO: FICO® Scores Versions
- myFICO: What's in My FICO® Scores?
- Credit Karma: What You Should Know About the VantageScore 3.0 Credit Scoring Model
- Experian: The Difference Between VantageScore® Scores and FICO® Scores
- Experian: What Is a Good Credit Score?
- First Alliance Credit Union: What Is an Educational Credit Score?
- WalletHub: 300 to 850 Credit Score Range: Learn the Credit Scale
- LifeLock: How Do Credit Scores Work?
- Investopedia: Beacon (Pinnacle) Score
- FICO Score: Where to Get Your FICO® Scores
- Forbes: Which Credit Score Do Lenders Actually Use?
- VantageScore: Where to Get a Credit Score
- Investopedia: Top Sources for Free Credit Scores
Ashley Donohoe has written about business and technology topics since 2010. Having a Master of Business Administration degree, bookkeeping certification and experience running a small business and doing tax returns, she is knowledgeable about the tax issues individuals and businesses face. Other places featuring her business writing include Zacks, JobHero, LoveToKnow, Bizfluent, Chron and Study.com.