Types of Credit Scores and How to Use Them

Updated · Mar 06, 2023

Credit scores are one of the most important aspects of a person's financial life.

Creditors use them to decide whether to lend you money. But things aren’t that simple.

You don’t get one universal number. There are several types of credit scores. They vary depending on the scoring model, reporting agency, and type of credit you’re applying for.

Below, we discuss the differences between them, as well as the usage and calculation of each one.

What Are Credit Scores?

A credit score is a numerical representation of the risk of lending money to individuals and businesses.

Some countries use completely different systems. But in the US, this is the determining factor of your creditworthiness.

The higher your score is, the more likely you are to be approved for a loan or credit card. It also helps you get better terms.

What Are the Different Credit Scores?

The most commonly used scoring models are the FICO® Score and the VantageScore.

What is a FICO® Score?

The FICO® Score was created by the Fair Isaac Corporation in 1989.

It is based on five factors:

Payment history (35%): This is the most influential factor. It includes information about missed and on-time payments.

Credit utilization (30%): It measures the amount of debt compared to the total available credit.

Length of credit history (15%): It shows the age of your accounts.

Credit mix (10%): This factor looks at the types of credit accounts you have—revolving credit (e.g., credit cards) and installment loans (e.g., auto loans).

New credit (10%): This indicates how often you've applied for new credit and how long it's been since you opened a new account.

What Are the Five Levels of Credit Scores?

The FICO® Score ranges from 300 to 850 points. It is divided into five levels determining your creditworthiness:

  • Exceptional: 800-850
  • Very Good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: 300-579

FICO® Score Versions

Credit usage levels are increasing every year. So, the FICO scoring model is updated periodically to reflect these changes. As a result, there are several FICO® Score versions.

The most widely used versions are FICO® Score 8 and 9. At the time of writing, the newest one available is FICO® Score 10.

In addition, there are several industry-specific FICO® Scores for different purposes.

For example, many creditors use the FICO® Auto Score 8 to evaluate auto loan applications and the Bankcard Score 8 for credit cards.

Mortgage lenders usually rely on older versions—even as old as FICO® Score 2.

What Is a VantageScore?

The VantageScore was created by the three major credit bureaus—Experian, Equifax, and TransUnion.

It is calculated similarly to the FICO® Score, but it gives different weight to the factors.

  • Payment history: 40%
  • Length of credit history: 21%
  • Credit utilization: 20%
  • Outstanding balances: 11%
  • New credit: 5%
  • Credit mix: 3%

What Are the Levels of VantageScore?

VantageScore starts from 300 and goes up to 850. Its credit score ranges are:

  • Excellent: 781-850
  • Good: 661-780
  • Fair: 601-660
  • Poor: 500-600
  • Very poor: 300-499

Other Credit Scoring Models

The two most common models are VantageScore and FICO. That said, there are other types of credit scores out there.

For instance, many lenders use custom models based on in-house statistics.

Why Do I Have Different Credit Scores?

Although based on similar criteria, all scoring models produce slightly different credit scores.

For example, Equifax has created its own model, using a scale from 280 to 850 instead of the traditional 300-850 point scale.

In addition, lenders can choose which agency to report to. As a result, credit bureaus may contain different information about your history.

And since your score is based on the data in your report, results from TransUnion, Equifax, and Experian will vary slightly.

How to Check Your Credit Score

Checking the different credit scores and reports available through the major credit bureaus is an important part of maintaining good financial health.

It can help you identify potential mistakes and signs of fraud in your history. Plus, if you’re trying to improve your creditworthiness, you can track your progress.

A good credit score increases your chances of getting a mortgage, loan, or credit card. It also means lower interest rates and better terms.

You can get one free report per year from each of the credit bureaus or at annualcreditreport.com.

In addition, some financial institutions offer credit scores as part of their online banking tools.

There are also plenty of free credit scoring services online, like Credit Karma or Credit Sesame.

They offer educational scores. Although lenders don’t use them, they allow you to monitor your progress.

Wrap Up

There are many types of credit scores. They vary depending on the model and credit bureau used to calculate it.

FICO® Score is the most widely used one, but there are other models available as well.

You can check your credit score at the credit reporting agencies, your financial institution, or on third-party websites.

Just remember that the lender could use another model to calculate it, resulting in a slightly different number.

Aleksandra Yosifova
Aleksandra Yosifova

With an eye for research, Aleksandra is determined to always get to the bottom of things. If there’s a glitch in the system, she’ll find it and make sure you know about it.