In the U. S. , two companies dominate the credit scoring industry. Although VantageScore® has been gaining market share since its creation in 2006 by the three major credit reporting agencies, FICO® remains the industry leader. Both companies develop credit scores that lenders and creditors can use to evaluate applicants and manage customers accounts. However, VantageScore and the FICO® scoring models use slightly different criteria to determine your scores.
Ever wondered what FICO® score Experian uses to assess your creditworthiness? You’re not alone! Navigating the world of credit scores can be confusing especially with different versions and scoring models floating around. This comprehensive guide will demystify the FICO® score landscape and answer all your burning questions about Experian’s scoring practices.
Unveiling the Mystery: Experian’s FICO® Score Arsenal
Experian, one of the “Big Three” credit bureaus, utilizes a variety of FICO® score versions to paint a comprehensive picture of your credit health. These versions cater to different lending scenarios, ensuring that lenders have the most relevant information for making informed decisions.
The Classic Trio: FICO® Scores 2 4, and 5
These “classic” FICO® scores, also known as “mortgage scores,” are the traditional 300 to 850 range scores used for mortgage lending. Each bureau offers its own version:
- FICO® Score 2: The Experian version of the classic FICO® score.
- FICO® Score 4: The TransUnion version of the classic FICO® score.
- FICO® Score 5: The Equifax version of the classic FICO® score.
The Modern Marvels: FICO® Scores 8 and 9
FICO® Scores 8 and 9 are newer versions that have gained widespread popularity among lenders. They are considered more predictive of future credit behavior and are used for various loan types, including mortgages, auto loans, and credit cards.
- FICO® Score 8: This is currently the most widely used FICO® score version, offering a more nuanced assessment of creditworthiness.
- FICO® Score 9: This version is also widely used and incorporates additional data points for enhanced accuracy.
Industry-Specific Scores: Tailored for Specific Needs
Beyond the standard FICO® scores, Experian also offers industry-specific versions designed for specific lending scenarios. These include:
- FICO® Auto Score: This score is specifically designed to predict the likelihood of a borrower repaying an auto loan.
- FICO® Bankcard Score: This score focuses on assessing a borrower’s creditworthiness for credit card applications.
Choosing the Right FICO® Score: A Lenders’ Game
While Experian provides various FICO® score versions, the specific score a lender uses can vary depending on the type of loan and their internal policies. It’s important to remember that lenders may also consider other factors beyond your FICO® score when making lending decisions.
Unlocking Your Credit Score Potential: Tips for Improvement
Regardless of the specific FICO® score used, maintaining a healthy credit score is crucial for accessing favorable loan terms and interest rates. Here are some tips to boost your credit score:
- Pay your bills on time: This is the single most impactful factor on your credit score.
- Keep your credit utilization low: Aim to use less than 30% of your available credit.
- Limit new credit applications: Each credit inquiry can slightly lower your score.
- Dispute any errors on your credit report: Inaccuracies can negatively impact your score.
- Build a positive credit history: Maintain a mix of credit accounts and use them responsibly.
Experian: Your Credit Score Partner
Experian offers various tools and resources to help you understand and improve your credit score. You can access your free credit report and FICO® Score 8 through Experian’s website or mobile app. Additionally, Experian provides educational resources and personalized recommendations to help you navigate your credit journey.
Empowering Your Financial Future
Understanding the FICO® scores used by Experian is crucial for making informed financial decisions. By monitoring your credit score, implementing responsible credit habits, and leveraging Experian’s resources, you can build a strong credit foundation for a brighter financial future.
Frequently Asked Questions
Q: What is the difference between FICO® Score 8 and FICO® Score 9?
A: FICO® Score 9 incorporates additional data points, such as rent payments and utility bills, for a more comprehensive assessment of creditworthiness.
Q: Which FICO® score should I focus on improving?
A: It’s best to focus on improving all your FICO® scores, as you don’t know which one a lender might use.
Q: How often should I check my credit score?
A: You can check your free credit report and FICO® Score 8 weekly through Experian.
Q: How can I dispute errors on my credit report?
A: You can file a dispute directly with Experian or the credit bureau that reported the error.
Additional Resources
- Experian Credit Education Center: https://www.experian.com/blogs/ask-experian/
- FICO® Score FAQs: https://www.myfico.com/en-US/credit-education/fico-scores
- Consumer Financial Protection Bureau: https://www.consumerfinance.gov/topics/credit-and-debt/credit-scores/
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor for personalized guidance.
VantageScore and FICO Create Multiple Credit Scores
VantageScore and FICO® create credit scoring models—software that can analyze a credit report to generate a credit score. Furthermore, the objective of the consumer risk scores generated by VantageScore and FICO® is the same: to forecast the probability that an individual will become at least 90 days delinquent on a bill within the next 24 months.
Both the base FICO® model and the VantageScore model are generic credit scores, which means that a variety of creditors, including card issuers, online lenders, and private student loan providers, can use them. In addition, FICO® generates industry-specific bankcard and auto scores that are customized for card issuers and auto lenders using the same methodology as the base FICO® scores.
Like other software, VantageScore and FICO® periodically update their scoring models to take into account new information, technology, and industry practices and to make sure they continue to be predictive in the face of shifting consumer behavior.
The first VantageScore model, version 1. 0, was launched in 2006; the company released the latest version, 4. 0, in 2017. The FICO® ScoreTM 8 (introduced in 2004) and FICO® Score 9 (introduced in 2014) are the most recent iterations of the FICO® base scoring model, which dates back to 1989. Creditors have the option of selecting a model to use or experimenting with several models to see which one works best for them in assessing risk with their specific clientele.
You might check your VantageScore and FICO® credit scores and wonder why theyre different. In part, its because the models give varying levels of importance to different parts of your credit report.
Tri-Bureau vs. Bureau-Specific Models
VantageScore combines a credit report from Experian, Equifax, or TransUnion into a single tri-bureau model.
FICO® creates bureau-specific scoring models. Consequently, despite the fact that the most recent FICO® Score 9 may go by a single name, there are actually three somewhat different models of the score—one for each of the major credit reporting agencies.
You must have had activity on a credit account (also known as a “tradeline”) for the preceding six months in order for FICO® to generate a credit score based on one of your credit reports. The tradelines do not have to be the same.
If there is at least one account on your credit report—even if it is only open for a few months—VantageScore might be able to score you.
Additionally, neither credit score agency will score a credit report if the report indicates the consumer is deceased.
Higher scores are indicative of a lower likelihood of missing payments according to all these credit scoring models, which is why lenders are willing to give those with high scores the best rates and terms.
The base FICO® Scores range from 300 to 850, while FICOs industry-specific scores range from 250 to 900.
The first two versions of the VantageScore ranged from 501 to 990, but the latest VantageScore 3. 0 and 4. 0 use the same 300-to-850 range as base FICO® scores.
What qualifies as a good score can vary from one creditor to another. Nonetheless, a score of at least 670 for FICO® and 700 for VantageScore on a 300–850 scale will typically be considered good credit.