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FICO vs “Other” Credit Score
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When you first start learning about your credit ratings, the terminology can be confusing. What is a FICO score? Is it the same as a credit score? Read on to learn a bit more about credit scores and how they’re derived:
Your FICO Score
Your FICO score is a three digit number between 300 and 850. A higher score is better. It started selling its scoring system to businesses in the late 1950s. It is based on reports from Experian, Equifax and Transunion, the three major credit reporting bureaus. These bureaus keep track of credit lines, debts and your payment history.
This score is used by 90% of financial institutions when determining your credit-worthiness when you are seeking a car loan, mortgage, credit card or other credit.
Other Types of Credit Scores
FICO, however, is not the only credit score out there. Each of the three major credit bureaus have their own scoring systems. Equifax offers ScorePower, a branded version of the a credit score, as well as their own Equifax Credit Score. Experian offers a score they call the PLUSScore. The three credit bureaus also collectively offer the VantageScore, which is intended to be a competitor to FICO. While FICO is the most commonly used score, banks and other institutions will also often consult one of the above, as well, when making credit decisions.
There are also a number of credit scores offered now that do not use credit reporting data. Scorelogix offers the JSS Credit Score, which assesses credit risk based on job history, income and the impact of the economy. L2C uses a potential borrower’s history of utility payments to determine credit risk. Because the FICO score only shows how well someone has done in the past, many banks are complementing these scores with alternative credit scores to predict whether a borrower will be able to continue to make on-time payments.
Things That Affect Your Score
All of the credit scoring companies take into account the same factors when determining your score. These include:
- the length of your credit history
- current debt
- your payment history
- the types of credit you use
- how recently you looked for new credit
Each of the credit scoring companies weight these items differently by a few percentage points. Because of this, your credit score will vary by institution.
How to Get Your Credit Scores
All consumers in the US are entitled to free credit reports from all three bureaus once a year. However, you are not guaranteed free access to your FICO and other credit scores. The company has partnered with credit card companies to offer free monthly FICO scores on credit card statements. You can also get your VantageScore free from CreditKarma. By using these tools, you can make better decisions about what sorts of credit you qualify for and pick the best instruments for you.