Keeping regular track of your FICO score is a good way to know you are on the right path as you repair credit and work toward greater financial opportunities. But, it turns out that the score you see when you log into My FICO or your bank’s online portal doesn’t tell the whole story. Depending on what you are buying, your potential lender can be looking at any one of 18 or more unique scores.
Why the Different Numbers?
Do You Really Know Your Credit Score? There are a couple of different reasons behind the different scores. The first is that your FICO score is generally calculated by a third-party credit reporting bureau. Experian, Equifax and TransUnion each use FICO’s software to calculate your credit score based on the information that they have in their credit reports on you. They then sell these scores to financial organizations and lenders. Each bureau typically has different information; you can see the differences when you pull your credit report. Because of this, the score that is sent your your lender will be different.
And, different lenders may emphasize different desirable qualities. A credit card company may be more interested in your ability to manage available credit. An auto lender may want to see how well you have done in the past with installment loans. While the factors that make up your FICO score will all still count, some will count more heavily than others depending on a specific lender’s needs.
What You Can Do
In general, the difference between one score and another will not be wide; if you have generally good credit, the small differences between scores may not make a difference in your ability to borrow. For large financial commitments like home loans, lenders typically will pull all three scores.
If you are particularly curious and wish to get a deeper look at your scores, Fair Isaac will soon be providing additional data. Soon, paying customers at My FICO will be able to see the 18 most popular versions of their FICO scores on the site.
In the meantime, the usual wise advice holds true. Your FICO score is based on what is reported on your credit reports. Pull all three reports once a year to check each of them for inaccuracies. Attend to any issues such as collections and missed payments right away to bring up your score. If you want to apply for more revolving credit, consider paying down the credit that you currently have. Lenders like to see under 30% utilization. If you want to buy a home, your credit history should show some sort of installment loan. Consider buying a car using an auto loan to build your history in this area.
By making responsible credit decisions and carefully monitoring your reports, you can increase your score and get access to the financial opportunities that are important to you.