When you see an advertisement or service offering to show you your credit score, did you know that it might not necessarily be the same score that the major banks and lenders use? Here’s what you need to know about the different types of credit scores and how they should be used.
A credit score is a measurement of creditworthiness as a three-digit number between 300 and 850. The higher the number, the more reliable you’re perceived to be at paying back the money you’ve borrowed. This means you may have a better chance of being approved for new credit lines.
In the U.S., credit scores are typically reported using one of two types of models.
In many ways, a VantageScore is very similar to a FICO Score. They use the same scale and look at the same criteria from your credit history. However, those inputs are weighed differently, and so there is almost always a difference between your FICO and VantageScore. This can sometimes lead to confusion or misinterpretation. For example, the point where your VantageScore increases from “Fair” to “Good” is 661. However, with your FICO Score, you’d need a 670 to have a “Good” score.
Since lenders predominately use the FICO model, you’ll always want to make sure you know your true FICO Score before applying for a new credit line. However, your VantageScore can serve as a good ballpark indicator of what your FICO Score might be.
No matter which credit score you prefer to use, the same good daily habits will help make them as high as they can go. Here’s what you need to do to be as appealing as possible to creditors:
Your credit score shows your creditworthiness. Many lenders use FICO Scores to determine this, but VantageScore is another good way to check how you’re doing. Practice good credit habits daily such as paying your bills on time, in full, and keeping the usage minimal.