Is there even a difference between your credit score and your FICO score? Actually, yes! Check out this article to learn more.
Your credit score tells lenders how likely you are to pay your bills on time. The better your credit score, the less risky you look as a borrower. But a “credit score” is an overarching term to describe your overall creditworthiness.
The 3 major credit bureaus are TransUnion, Equifax, and Experian. Each bureau calculates their own credit scores, so your score may vary between the three different bureaus.
What Is A FICO Score?
A FICO score is just one kind of credit score, but it’s the most popular one. Think of it this way: if credit scores were search engines, the FICO score would be Google.
The name “FICO” comes from the Fair Isaac Corporation. Generally, FICO scores can range from 300 to 850, with a 740 usually considered to be an excellent score. However, there are different versions of FICO scores, with some being industry-specific. These industry-specific FICO scores generally range from 250 to 900.
For example, if you’re applying for a credit card, the credit card issuer will probably look at your FICO Bankcard Score. But if you finance a new car, the auto lender will look at your FICO Auto Score. For purchasing or refinancing a home, mortgage lenders will look at different versions of your FICO scores across all three of the major credit bureaus.
In addition to industry-specific FICO scores, there are new models of FICO scores that are released throughout the years. For instance, the FICO Version 9 came out in 2014.
Are There Other Types Of Credit Scores?
Yes! One alternative to a FICO score is the VantageScore, and there are different versions of VantageScores being released such as 2.0, 3.0, and 4.0.
Also, some large lending institutions will use their own, customized scoring models to determine your credit score.
All in all, credit is pretty complicated. There are several different types and models of credit scores, with new versions constantly being released. Chances are, you have dozens of different credit scores.
What Does This Mean For You?
Instead of trying to master the complexity of different credit scores, it’s best to focus on good credit behaviors across all of your finances. These healthy credit behaviors include paying your bills on time, preventing debt from going to collections, and maintaining a strong credit utilization ratio.
If you’re struggling to repair or maintain your credit, then talking to a reputable credit counselor can help you come up with a game plan. When it comes to navigating your credit history or even disputing errors on your report, it may be best to talk to an expert who can negotiate with creditors on your behalf.