Using the FICO score as an example, the following pie chart shows how different factors make up your credit score.Ī FICO score is determined based on five criteria. The factors that play a bigger part in determining if you are likely to go bankrupt get more weight than lesser considerations – for instance, how you have paid creditors in the past is much more important than the types of accounts (credit mix) that you have. Your credit score is based on a combination of different parts of your credit report. Credit Score Chart: How Is Credit Score Determined?Ĭredit score models differ, but most commonly use a scale of from 300 to 850 to rate credit from bad to excellent. And they analyze your credit report to determine if you manage credit well, to verify the amount of debt you carry, and to make sure that you can afford any loans they approve for you.Ĭredit score and credit report are related in that credit scores are based on much of the detail contained in your credit report. Many businesses use credit scoring to establish your eligibility for financing or to determine the interest rate they offer you. It also includes derogatory events like collection activity and public filings like bankruptcies or lawsuit judgments. It includes specific information on active and closed credit accounts and how you managed your payments. This can be thought of as a summary of how safe you are considered to be with credit.Ī credit report doesn’t include a summary number. credit reportĪnother term you might hear besides “credit score” is “ credit report.” These things are different, though they are related.Īs mentioned above, credit score boils a lot of factors down into a single number. The weight given to each factor may vary that’s how models applied to the same data generate different scores. However, what they have in common is that they consider the same factors: If there are 20 versions of credit scoring models applied across three sets of data, that’s 60 different credit scores! Common factors in credit scoringĭifferent scoring models make credit scores vary. It makes sense, then, that each consumer may have many credit scores. If Experian has a late payment in its database, but TransUnion does not, your TransUnion score is likely to be higher. Some creditors report to all three bureaus while others report to just one or two. Second, there are three credit bureaus collecting information, and they don’t necessarily have the same information. A score using VantageScore 8 will probably differ from one using VantageScore 9.įurther complicating things is the fact that there are different credit scores for different purposes - for example, whether you are applying for insurance, an auto loan, a mortgage, or a credit card. And lenders don’t typically abandon their old version every time a new one comes out. Both of those models have multiple versions. This was developed jointly by the three major credit bureaus, in an effort to standardize credit scoring across all three. The VantageScore is another popular scoring model. This is the oldest and most widely used form of credit score. A FICO Score is calculated by the Fair Isaac Corporation, an analytics company that helps businesses manage risk. That’s because there are many different credit scores.įirst of all, there are two major organizations that calculate credit scores. People are sometimes confused to see that they have different credit scores depending on where they look. When a lender wants to see your credit score, it pulls your report from a credit bureau and runs that data through its chosen scoring model. They are Experian, TransUnion, and Equifax. The three main sources of credit data are the big three credit reporting agencies, also called credit bureaus. The two main scoring models are FICO and VantageScore, and each model offers several versions. It takes two components to create a credit score – data and a scoring model. People with high credit scores are statistically much less likely to go bankrupt or default on loans than those with low credit scores. Topics covered include:Ĭredit score chart: How is credit score determined?Ĭredit score chart: from good credit to bad creditĪ credit score is a number that indicates how likely you are to default on (not pay) loans or how likely you are to file bankruptcy. This article will explain what your credit score means and summarize different levels of credit scores in a chart. This means knowing what goes into a credit score, how it can affect you, and what your credit score looks like. Understanding your credit score can help you make sure you’re not hurt by it. Your credit score may influence things like where you live and what kind of job you can get. So just how well do you know your credit score?Ī credit score impacts you financially, but you may be surprised about how else it can affect you. Businesses make judgments about you based on your credit score all the time.
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