Here's why you have many different credit scores (2024)

FAQs

Here's why you have many different credit scores? ›

The three major credit bureaus (Equifax, Experian and TransUnion) developed VantageScore in 2006 as an alternative to the FICO score. Both FICO and VantageScore offer different types of credit scores depending on what kind of information lenders are requesting and which credit score model is being used.

Your credit scores may vary according to the credit scoring model used, and may also vary based on which credit bureau furnishes the credit report used for the data. That's because not all lenders and creditors report to all three nationwide credit bureaus. Some may report to only two, one or none at all.

The primary reason for varying credit scores is the existence of multiple scoring models. Different websites and credit bureaus use different models. They use these to calculate your credit score. Each model may generate a slightly different score.

Lenders and credit reporting agencies often use different scoring models. One model might place the most importance on your payment history. Another could prioritize the types of credit you have available. Because of these differences, your score could vary depending on how it was calculated.

Experian and Equifax provide 16 different FICO credit scores to lenders, while TransUnion has 21. More are added each year. Industry-specific scores are optimized for specific credit products like auto loans or credit cards.

FICO^® Scores^☉ are used by 90% of top lenders, but even so, there's no single credit score or scoring system that's most important. In a very real way, the score that matters most is the one used by the lender willing to offer you the best lending terms.

Lower credit scores indicate that you are more likely to be a credit risk, while higher credit scores indicate that you are more likely to be a responsible borrower. Although there are different types of credit scores, the two main credit scoring models—FICO and VantageScore—use a 300-850 point credit scoring scale.

According to Darrin English, a senior community development loan officer at Quontic Bank, mortgage lenders request your FICO scores from all three bureaus — Equifax, Transunion and Experian. But they only use one when making their final decision. If all of your scores are the same, the choice is simple.

Neither your TransUnion or Equifax score is more or less accurate than the other. They're just calculated from slightly differing sources. Your Equifax credit score is likely lower due to reporting differences. Nonetheless, a “fair” score from TransUnion is typically “fair” across the board.

Highlights: While older models of credit scores used to go as high as 900, you can no longer achieve a 900 credit score. The highest score you can receive today is 850. Anything above 800 is considered an excellent credit score.

Which credit scores actually matter? ›

FICO scores are generally known to be the most widely used by lenders. But the credit-scoring model used may vary by lender. While FICO Score 8 is the most common, mortgage lenders might use FICO Score 2, 4 or 5. Auto lenders often use one of the FICO Auto Scores.

You'll typically need a credit score of 620 to finance a home purchase. However, some lenders may offer mortgage loans to borrowers with scores as low as 500. Whether you qualify for a specific loan type also depends on personal factors like your debt-to-income ratio (DTI), loan-to-value ratio (LTV) and income.

Of the three main credit bureaus (Equifax, Experian, and TransUnion), none is considered better than the others. A lender may rely on a report from one bureau or all three bureaus to make its decisions about approving a loan.

Of the three main credit bureaus (Equifax, Experian, and TransUnion), none is considered better than the others. A lender may rely on a report from one bureau or all three bureaus to make its decisions about approving a loan.

The credit bureaus collect slightly different data and use different scoring models, and since creditors are not required to report your data, each one may have slightly different information.