In this series on Credit Scores, I will discuss the various types of credit reports and the factors which influence your credit score. Credit reports consist of detailed information regarding an individual’s current and past financial obligations. Credit scores are essentially a numerical grade of the information contained within the credit report. These scores are used by credit card issuers, auto lenders, mortgage companies, and other lenders to judge the applicants financial responsibility prior to issuing credit. Remember you can obtain your free credit report from each agency one time per year at www.annualcreditreport.com. Contact the attorneys at Fears Nachawati with any questions.
- FICO Scores – FICO (otherwise known as the Fair Isaac Corporation), created the first credit scores in the 1950s. Since their creation, FICO scores remain the most widely used scoring model by lenders with over an estimated 90 percent of the market share in 2010 of scores sold to firm for use in credit related decisions. Although there are different FICO scoring models, the scores generally range from 300 to 850.
- Credit Reporting Agency Scores – Credit Reporting Agencies (Equifax, Experian and TransUnion) each utilize their own scoring model, which causes scores to vary among the three main agencies. These scores were originally created to predict performance on credit obligations. However, today these scores are primarily used as educational scores for consumers. Each agency uses differing ranges of scores. For example:
Equifax’s Credit Score ranges from 280 to 850.
Experian Plus Score ranges from 330-830.
TransUnion TransRisk New Account Score ranges from 300-850.
- VantageScore – VantageScore is produced by VantageScore LLC, which is a joint venture of the three credit reporting agencies. It was developed as a competitor to FICO. VantageScore results range on a scale from 501-990.
- -Payment History (35%)
- Amounts Owed (30%)
- Length of Credit History (15%)
- Types of Credit in Use (10%)
- New Credit (10%)