When you apply for new credit, whether it’s for a credit card, mortgage, or loan, most lenders consider your credit score. It might seem like that means you only have one credit score, but the truth is that you have quite a few. Your next question is probably “How many credit scores do I have?”
How Credit Scores are Calculated
Credit scores are calculated by using the information that appears on your credit reports. Each of the three major credit bureaus, Experian, Equifax, and TransUnion, gather information on your borrowing and payment history. Some lenders don’t report to all three bureaus, so the information each has may be slightly different.
A three-digit credit score is calculated using two main credit scoring models. The most well-known and the most often used version is your FICO score, and the other is your Vantage Score.
Different Versions of FICO and Vantage Scores
You might think that if there are two main credit scoring models, that means you have two possible credit scores, but that’s not the case. Credit scores can be based on information from a single credit bureau or from blended information. Both FICO and Vantage have released updated versions of their scores from time to time.
Both FICO and Vantage also provide specialized credit scoring models that evaluate the risk of certain kinds of loans such as credit cards, mortgages, and auto loans. There are also other less well-known scoring models that your lender might use. Some lenders come up with their own scoring model by evaluating the information from your borrowing history.
How Do I Know Which Score My Lender is Using?
The bottom line is there’s no way for you to know which credit score your lender may be considering when deciding whether to loan you money. Different lenders rely on any one of dozens of possible credit scores, each of which uses a slightly different way of measuring what’s on your credit report.
Since it’s impossible for you to know which score a potential lender is relying on, it’s important for you to be responsible for all borrowed money. To protect your credit, pay bills on time, keep your credit utilization low and avoid borrowing more money than you can afford to pay back.
Make Sure Your Credit Report is Accurate
Another important step to take when you’re trying to be proactive about your credit is to make sure that the information on your credit reports is accurate. If a credit bureau is providing inaccurate information, it can drive your score down. Errors found on credit reports may include reporting incorrect balances, showing loans as open that are paid off, or reporting loans as late that were never paid late. You may even find loans reported twice or loans that don’t belong to you.
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