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Understanding Credit Scores

Learn more about credit scores and how they’re calculated

Why are there so many different credit scores?

Your credit score is like a photograph — it’s a snapshot of your credit situation at one particular moment in time. And just like a photo, the quality of it depends on where you are that day, who’s taking the photo, why they’re taking it, and what kind of camera they’re using.

Standardized credit scores have only been around since 1989 when the Fair Isaac Corporation devised the first credit-scoring algorithm. This credit scoring model — called the FICO® Credit Score after the company’s name — standardized the process of credit diagnostics, and quickly became the industry standard.

Why we have multiple scores

So, if the process is standardized, why do you have a different credit score on every credit report? Let’s look at 4 reasons why.

Lenders use different scoring models based on credit type

When you apply for credit, one size doesn’t fit all. Mortgage lenders typically use the one FICO® scoring model, while auto lenders and credit card issuers often choose to use the FICO® Auto Score and FICO® Bankcard Score to more accurately measure the credit worthiness of borrowers. And some lenders use scoring models other than FICO®.

Because each scoring model measures different aspects of your credit, your score can vary depending on the model used. So, if you’re comparing different credit scores, make sure you’re comparing apples to apples when it comes to the scoring model used.

Scores can also vary because the range is different for standard and industry-specific scoring. The standard FICO score has a range of 300 to 850, while the FICO Auto Score and FICO Bankcard Score have a slightly wider range of 250 to 900.

The 3 credit bureaus use different credit scoring formulas

To make matters even more complicated, each of the 3 major credit reporting bureaus — Experian, Equifax, and TransUnion — use different formulas in compiling your credit report and determining your credit score. Among all 3 bureaus, there are 28 different FICO scores that are commonly used. So, depending on which bureau is evaluating your credit — and the reason why — you could have a dozen or more different credit scores on the same day.

Information may vary from bureau to bureau

All of your credit information may not be reported to all 3 credit bureaus since it comes from a variety of sources. So, don't assume each bureau has the same information on your credit history. And if you’ve applied for credit with your maiden name or with different versions of your name — like Robert Jones and Bob Jones — there may be fragmented or incomplete files at the 3 credit bureaus, resulting in very different scores.

Timing is everything

Your credit score can also vary across the 3 credit bureaus because of timing. Information about your credit can come from different reporting sources at different times. And each bureau updates credit reports at different times of the month. So, you could have 3 different scores on the same day. And that timing can impact you when one credit bureau is missing an account or other information that either helps or hinders your score.

Don’t sweat it

Credit scores can change once a week or not at all for months depending on your credit activity. The bottom line is: you’re more likely to be approved for credit if your credit score is 700 or higher.

Remember to check your credit report and scores at least once a year to make sure the information on it is accurate and up-to-date. And do everything you can to keep your score high — see Good Credit Habits