Which Credit Score Agency is the Most Accurate?
The world of credit can be confusing by itself. Determining whether you need more credit, how to get credit, and how to maintain a good credit score can be mind-boggling.
To make matters even more complex, your credit score isn’t just one score.
In fact, you actually have dozens of credit scores, with each possibly being an important number that creditors and those in the financial world use to grade your credit worthiness.
So, although you could get a score from one source that rates you in a high credit range, another might provide a score that is much different. If you’re looking at your credit scores and evaluating your credit, here’s what you need to know about the many different scoring models that are available.
More Than One Credit Score
On its face, a credit score is merely a numerical representation of the data in your credit reports held by the three major credit bureaus, TransUnion, Experian, and Equifax.
Different creditors might report your activity to one or all three of these bureaus. This is another reason your credit score could vary among different providers.
Another reason, however, is that each company that provides a credit score uses its own formulas to calculate scores using the data in your credit reports. Each score can emphasize different aspects of your credit behavior. For example, one credit scoring company might give more weight to late payments, while another might focus more on your auto loan history or a mixture of credit.
Essentially, this means that your score can not only be confusing but also that there is no such thing as an “accurate” credit score. Each formula uses factual information from your credit history. However, each weighs and calculates that information differently.
The Most Relevant Credit Score
Although there are many different scores and scoring models, there is a light at the end of this confusing tunnel. Among all the credit score models, the FICO credit score is used by more than 90% of major U.S. lenders.
You might have a different score calculated by a different scoring model with a different provider. However, it's very likely that the lender or creditor will use the FICO score to determine if they'll approve your application for a new line of credit.
Because of this, you might want to keep your eye on your FICO score, rather than many of the others that are available, simply because this is the number the lenders care about most. A FICO score ranges from 300 to 850 (higher is better).
Credit Score Ranges and Quality
|Credit Score Ranges||Credit Quality||Effect on Ability to Obtain Loans|
|300-559||Very Bad||Extremely difficult to obtain traditional loans and line of credit. Advised to use secured credit cards and loans to help rebuild credit.|
|560-649||Bad||May be able to qualify for some loans and lines of credit, but the interest rates are likely to be high.|
|650-699||Average/Fair||Eligible for many traditional loans, but the interest rates and terms may not be the best.|
|700-749||Good||Valuable benefits come in the form of loans and lines of credit with comprehensive perks and low interest rates.|
|750-850||Excellent||Qualify easily for most loans and lines of credit with low interest rates and favorable terms.|
FICO Score Background
You’ve probably heard of FICO, but did you know it goes back as far as 1989? At that time, it was referred to as Fair, Isaac, and company. The FICO score is based on the information in your credit files, provided by the three national credit bureaus. This score is designed to take into account various elements of your financial history.
No one really knows the exact formula for calculating your FICO score, but there are certain factors that we know impact your score.
Factors that Impact FICO Score
Along with being aware of the many different types of scores and which ones are most often used by creditors, you should know how your FICO score is calculated. The factors that impact your FICO score include the following:
FICO Credit Score Factors and Their Percentages
|FICO credit score factors||Percentage weight on credit score:||What it means:|
|Payment history||35%||Your track record when it comes to making (at least) the minimum payment by the due date.|
|Amounts owed||30%||How much of your borrowing potential is actually being used. Determined by dividing total debt by total credit limits.|
|Length of credit history||15%||The average age of your active credit lines. Longer histories tend to show responsibility with credit.|
|Credit mix||10%||The different types of active credit lines that you handle (e.g., mortgage, credit cards, students loans, etc.)|
|New credit||10%||The new lines of credit that you've requested. New credit applications tend to hurt you score temporarily.|
Where to Get Your FICO Credit Score
Because there is no shortage of companies, products, and websites offering access to free credit scores, it can be especially confusing to determine exactly where to find your FICO credit score.
Fortunately, you can actually get your FICO score free with credit card companies such as Discover, Citi, and Barclaycard. You can also get your FICO score from MyFICO.com.
Other Places to Get Credit Scores
Although other scores aren’t used as often by lenders, they are still useful for tracking changes to your credit and are offered for free.
If you don’t have a credit card or other product that provides free access to your score, it doesn’t hurt to track one of the other scores, even though it isn’t a FICO score.
You can also use these scores to check if you are making progress on your credit, and if there is a major decline or suspicious activity on your credit report, you can catch it right away. Then, you can at least investigate the activity and fix any issues.
Some of the other credit scores you might want to keep an eye on include the following:
This score might be one that you’ve seen in many places because it has become one of the more frequently used scores.
The VantageScore is actually provided directly by the three major credit reporting agencies, instead of a company that uses the information provided by the agencies. Your VantageScore ranges from 300 to 850.
Credit Bureau Scores
Even though the credit bureaus essentially joined forces to create the VantageScore, they also each provide their own score. For example, Experian provides the PLUS score which ranges from 330 to 830. TransUnion’s TransRisk Score ranges from 100 to 900, and your Equifax Score ranges from 280 to 850.
The PLUS score and Equifax Scores are recommended for educational purposes only and are not actually used by lenders.
This score is provided by CE Analytics and is used by sites like Community Empower and iQualifier.com. The CE Score is used by approximately 6,500 lenders in the Credit Plus network and is generally free if you want to track your credit. This score ranges from 350 to 850.
Credit Scores for Educational Purposes Only
Companies such as Credit Karma, Credit Sesame, and Credit.com often provide access to different credit scores as well. For example, Credit Karma uses TransUnion’s TransRisk New Account Score, Credit Sesame and Credit.com use the Experian National Equivalency Score.
The ChexSystems Consumer Score ranges from 100 to 899, and the LexisNexis Attract Insurance Score ranges from 500 to 997. Many of these scores are primarily for you to manage your credit and are not used by lenders.
Focus on FICO
Although there are many different scores and numbers floating around, there is one primary score that you should keep an eye on, and that’s your FICO score. If you aren’t able to access your score with one of the free opportunities, you can also rely on some of the other scoring models to manage your credit and detect any problems right away.
If you are working on improving your credit or maintaining good credit, you can use any of the scoring models that are available too, at least, get an idea where you stand. However, when you are ready to apply for a credit card, auto loan, or mortgage, it might be a good idea to go with the score most used by lenders and head straight to your FICO score first.