What’s a good credit score? It all depends on which company is crunching the numbers. Many consumers are shocked to learn that they have at least eight -yes, you read that right - different credit scores. And what’s considered a ‘good’ score on one credit-scoring system may not be so good on another. Here are the credit-scoring systems most commonly used by lenders:
FICO credit score. Credit-scoring company Fair Isaac Corporation created this score, which is popular with lenders trying to gauge the credit worthiness of borrowers. It ranges from 300 to 850. Because FICO scores top out at 850, scores above 760 are considered to be good to great to most lenders, although each has their own lending criteria. A score of 760 would not be so great on the VantageScore system, which tops out much higher.
VantageScore. The nation’s three credit-reporting bureaus, Experian, Equifax and TransUnion, created a score using information collected by all three companies. This score ranges from 501 to 990.
TransRisk score: Calculated by credit bureau TransUnion, these scores range from 300 to 850.
Equifax credit score: Calculated by credit bureau Equifax, this one ranges from 280 to 850.
Experian credit scores: Experian’s credit scores range from 330 to 830.
Confused yet? Although there are many different scoring systems, each one is based on a three-digit model and is based on the same type of information. Credit scores are designed to reflect how well you pay your bills on time, the length of your credit history and how much of your available credit you use (the less, the better). The best way to deal with credit score confusion when applying for credit is to ask your lender which scoring system they use so you can better understand your own score when it is given to you. When ordering your score, make sure you know the range of possible scores. Review the information you are provided with to help gauge the quality of your own score.
Want to learn more about credit scores? Go to this link to keep reading.