Introduction
When it comes to understanding your creditworthiness, having a good credit score is essential. But with so many different credit scoring models out there, it can be difficult to know which one is the most widely used. In this article, we’ll take a look at the three most common credit scores – FICO, VantageScore, and Experian Plus – to see how they stack up against each other.
A Comparison of the Most Commonly Used Credit Scores
The three most popular credit scores are FICO, VantageScore, and Experian Plus. Let’s take a closer look at each one to understand how they differ from one another.
FICO Score
The FICO score is the most widely used credit score. It ranges from 300 to 850 and is based on information gathered from your credit report. The five factors that make up your FICO score are payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%).
VantageScore
The VantageScore is an alternative to the FICO score that was developed by the three major credit bureaus – Equifax, Experian, and TransUnion. It ranges from 300 to 850 and is based on similar information as the FICO score, including payment history, credit utilization, account age, total accounts, and types of accounts. However, the VantageScore has some advantages over the FICO score, including a more consistent scoring system across all three credit bureaus and the ability to use trended data to better predict future performance.
Experian Plus Score
The Experian Plus Score is Experian’s proprietary credit score. It ranges from 330 to 830 and is based on information from your Experian credit report. Like the other two credit scores, it takes into account payment history, credit utilization, account age, total accounts, and types of accounts. However, it also considers additional factors such as debt-to-income ratio and recent inquiries.
Understanding the Different Types of Credit Scores
Before we dive into the pros and cons of each credit score, let’s take a step back and talk about what credit scores actually measure.
What is a Credit Score?
A credit score is a numerical representation of your creditworthiness. It’s based on various factors, such as your payment history, credit utilization, account age, total accounts, and types of accounts. A higher credit score indicates that you’re less likely to default on a loan or credit card, while a lower score suggests that you’re more likely to do so.
Factors that Impact Your Credit Score
There are several factors that can impact your credit score. These include:
- Payment history – late payments can have a negative effect on your score.
- Credit utilization – using too much of your available credit can hurt your score.
- Account age – older accounts typically have a positive effect on your score.
- Total accounts – having too many open accounts can negatively impact your score.
- Types of accounts – having a good mix of installment loans, revolving credit, and other types of accounts can help improve your score.
The Pros and Cons of Each Credit Score
Now that we’ve discussed what credit scores measure, let’s take a look at the pros and cons of each type of score.
FICO Score
Pros: The FICO score is the most widely used credit score, so it’s accepted by most lenders and creditors. It’s also the only score that is approved by the federal government for mortgage lending purposes. Additionally, it’s the only score that takes into account the number of accounts you have open and your payment history.
Cons: The FICO score can take up to 30 days to update, so it’s not the best option if you need your score to reflect recent changes. Additionally, it doesn’t take into account non-traditional forms of credit, such as rent payments.
VantageScore
Pros: The VantageScore is the only score that uses trended data to better predict future performance. It’s also the only score that takes into account non-traditional forms of credit, such as rent payments. Additionally, it’s updated more frequently than the FICO score, so it’s a good choice if you need your score to reflect recent changes.
Cons: The VantageScore is not accepted by as many lenders and creditors as the FICO score, so it may not be the best choice if you’re applying for a loan or credit card.
Experian Plus Score
Pros: The Experian Plus Score takes into account additional factors, such as debt-to-income ratio and recent inquiries. It’s also updated more frequently than the FICO score, so it’s a good choice if you need your score to reflect recent changes.
Cons: The Experian Plus Score is only available through Experian, so if you’re looking for a score that is accepted by a wider range of lenders and creditors, this may not be the best choice.
How to Find Out Which Credit Score is Being Used
If you’re applying for a loan or credit card, it’s important to know which credit score is being used to determine your eligibility. Here are two ways to find out:
Checking Your Credit Report
Your credit report will list the credit scores that were used to determine your eligibility. You can get a free copy of your credit report from each of the three major credit bureaus once per year.
Contacting Your Creditor
If you’re already a customer of a particular lender or creditor, you can contact them to find out which credit score they use. They should be able to provide you with this information.
Tips for Improving Your Credit Score Regardless of Which One Is Used
No matter which credit score is being used, there are several steps you can take to improve your score. Here are a few tips:
Pay Bills on Time
Making sure all of your bills are paid on time is one of the best ways to improve your credit score. Late payments can have a significant negative impact on your score, so it’s important to stay on top of your payments.
Check Your Credit Report Regularly
It’s important to check your credit report regularly for errors or discrepancies. If you find any errors, be sure to contact the credit bureau to dispute them.
Monitor Your Credit Utilization
Credit utilization is the amount of credit you’re using compared to the amount of credit you have available. Keeping your credit utilization low (ideally below 30%) can help improve your credit score.
Avoid Applying for Too Many Credit Accounts
Opening too many new credit accounts in a short period of time can have a negative impact on your credit score, so it’s best to avoid doing this.
Conclusion
In conclusion, there are three main credit scores – FICO, VantageScore, and Experian Plus – and each one has its own pros and cons. To find out which credit score is being used, you can check your credit report or contact your creditor. Finally, there are several steps you can take to improve your credit score regardless of which one is being used, such as paying bills on time, checking your credit report regularly, monitoring your credit utilization, and avoiding applying for too many credit accounts.
