Are all credit scores the same?

The answer is no! There are several credit scoring models being utilized today. In fact, each of the major three credit bureaus offers a monthly subscription based service which tells you their version of your estimated credit score. Unfortunately, the score provided for the fee is not the same credit score given to lenders evaluating your credit worthiness.

It is important to realize that FICO® (Fair Isaac Company) is the preferred scoring company used by lenders. Each credit bureau – Experian, TransUnion and Equifax – gives lenders an official FICO® score based on the information available in their respective credit reports. The scoring scale for FICO® is 300-850, and the score itself is calculated using software provided by FICO. Each bureau issues an official FICO® credit score, with each bureau weighing certain information differently. Creditors do not necessarily provide information to all three credit bureaus, which accounts for variations in the three scores. A credit file is opened with the credit bureaus once they receive information indicating you have at least one account active within the last six months. Figures provided by FICO® indicate that 25.5 percent of all consumers–nearly 43.4 million people–now have a credit score of 599 or below.

Factors that the FICO® Score weighs include payment history, how much of your available credit you are utilizing, how long have you had an open credit account, the type of credit used (credit cards verses loans) and recent applications for credit.

Other scoring models include the NexGen Score. Although produced by FICO®, it has not reached widespread adoption by the lending industry. The three credit bureaus joined together to create the Vantage Score in 2006, a product competing for market share within the credit scoring world. The scoring scale for Vantage is 501 to 990 and is substantially different from FICO®. Currently less than 10 percent of lenders are using Vantage Score in their lending decisions.

As a consumer seeking to improve your credit scores, it is important to confirm that you are using your FICO® scores as a baseline standard, since these scores reflect what a majority of lenders and underwriters are utilizing when making a determination about your credit worthiness.