At some point, most adults have applied for at least one form of credit. Maybe that’s a mortgage, a student loan, a car loan, or a credit card. Whatever type of financing you sought; odds are that your lender took a look at your credit score before making you an offer.
But what is a credit score really? Is it different than a FICO® Score? How do they work? And how can you check the score attached to your name?
Let’s start with your credit report. A credit report is a current and detailed summary of your credit accounts, your credit usage, and your history of paying bills toward those accounts.
Your credit score is calculated directly from your credit report. Essentially, a mathematical formula applies predetermined weights to specific elements of your credit report. And that formula produces the three-digit number that is your credit score.
While a credit report is incredibly detailed, a credit score ranks your creditworthiness with a single number and allows lenders to compare you easily to other people. Higher credit scores denote a more favorable credit history, while lower scores suggest potential problems with your finances.
Typically, you’ll see credit scores ranging from 300 to 850. But some go down to 250 or up to 900. It depends on the type of score you’re examining.
And your credit score is specific to you. Even if you share financial accounts with someone else — like a spouse, child, or business partner — your credit history report belongs to you and you alone.
Now, many people believe that they have a single credit score attached to their names. But the truth is that you don’t have just one. In reality, you might have dozens (or even hundreds) of credit scores!
A FICO® Score is one of the most widely used and well-known types of credit scores. Remember this: All FICO® Scores are credit scores, but not all credit scores are FICO® Scores.
The Fair Isaac Corporation (FICO®) first began producing these credit scores more than 30 years ago. Today, they’re considered the industry standard for effectively evaluating an applicant’s creditworthiness against other borrowers.
Since they entered the financial scene decades ago, FICO® Scores have undergone frequent updates. That is, the mathematical formula used to produce the score has been reworked to create new models over time.
So, for instance, the FICO® Score 8 might yield a different score for you than the more recent FICO® Score 9 or the brand-new FICO® Score 10 or FICO® Score 10T.
The FICO® Score 8 is often still used by lenders. And that scoring model breaks down into the following categories:
Excellent credit: 800 – 850
Very good credit: 740 – 799
Good credit: 670 – 739
Fair credit: 580 – 669
Poor credit: 300 - 579
All of these FICO® Score models actually apply to what are called base FICO® Scores. But you have plenty of credit scores beyond those as well.
Beyond the FICO® Score, there’s another increasingly popular base credit score called VantageScore. VantageScores first appeared on the financial scene in 2006.
The most recent model, VantageScore 4.0, scores individuals on a scale of 300 to 850 — just as FICO® does. And both models use information from your credit report to compute the score. But there are definite differences between a FICO® Score and a VantageScore.
Most notably, you’ll need at least six months of credit use before a FICO® Score is generated on your behalf. But the VantageScore model can produce a score with as little as one month of credit data. (Some people, as a result, don’t actually have a credit score.)
In addition to these two base credit scores, many industries use credit scoring models that are specific to their needs. Some of those scores belong to the FICO® family. And — of those scores — there can be multiple models!
So, for instance, there’s the FICO® Bankcard Score 8 or the FICO® Bankcard Score 9, which is typically referenced by credit card issuers. There’s also FICO® Auto Score 8 and FICO® Auto Score 9, which are pulled when you apply for car financing. Then there’s the FICO® Personal Finance Score and the FICO® Installment Loan Score. All of these industry-specific FICO® Scores range from 250 to 900 and have their own particular uses.
While all types of credit scores look at your credit history to compute your score, the precise formula for that calculation is unique to each score. That formula is proprietary, but we do have insight into which parts of your credit report carry the most weight in determining your score.
The FICO® base score, for instance, assigns the following weights when calculating your
Payment history: 35%
Amounts owed: 30%
Length of credit history: 15%
Credit mix: 10%
New credit: 10%
VantageScore doesn’t quantify its weights so transparently, but it does publish the following guidance on what elements of your credit history most impact your VantageScore calculation:
Total credit usage, balance, and total available credit: Extremely influential
Credit mix and credit experience: Highly influential
Payment history: Moderately influential
Length of credit history: Less influential
New accounts opened: Less influential
Now, while many potential factors can be considered in a credit scoring model, there are some details that, by law, can never be counted toward your credit score. Some of these factors include race, color, national origin, religion, gender, marital status, age, occupation, salary, job title, employment history, the area where you live, and soft credit inquiries.
Your credit scores are separate from your credit history report. But looking at your credit report can give you some valuable insight when you start looking at your scores.
You can order copies of your credit reports at a cost, but you’re legally entitled each year to a free copy of your credit report. And you don’t have just one. Each of the three major credit bureaus — Equifax, Experian, and TransUnion — gather data to produce separate reports. You can get one of each completely free each year through this site.
It used to be that viewing your credit score came with a fee. But, more recently, people have been granted increased access to free credit scores that they can view frequently.
Start with your credit card’s online account. A number of card issuers now display one of your base scores and update it monthly for you to track. Be sure to note which score you’re viewing. Some cards feature a recent FICO® Score model, some VantageScore 3.0, and others FICO® Bankcard Score 9.
You can also sign up for a free service that tracks your credit score over time. Credit Karma, for instance, gives you frequent access to some of your credit reports and displays your VantageScore 3.0 over time. Credit Sesame and Credit.com also offer you cost-free peeks at your VantageScore.
Some credit unions offer their members free access to credit scores as well. And the Discover Credit Scorecard lets you check your FICO® Score for free — even if you’re not a Discover cardholder.
When it comes to your credit score, there’s not just one number out there assigned to your name. Understanding the types of scores available can give you greater insight into your finances. And knowing where you stand can empower you to build a bright financial future.