A credit score is a number based on information in your credit reports. Most credit scores range from 300 to 850, and where your score falls in this range represents your apparent credit risk. In other words, this tells potential lenders how likely you are to repay what you borrow. Your credit score can affect a lender’s decision to approve you for a mortgage, car loan, personal loan, credit card or other type of credit. And if you’re approved, your credit scores can also help determine the interest rate and terms you’re offered.
How credit scores are created
Credit scores are calculated using information from your credit reports. Every one of the three significant customer credit agencies (Equifax, Experian, and Transunion) creates an acknowledge report for data from moneylenders, MasterCard guarantors, and other monetary establishments.
Your credit reports include information about your credit history and credit activity. Credit bureaus rely on credit scoring models like Vantage Score and FICO to translate all of this information into a number. While each credit scoring model uses a unique formula, the models generally report similar credit information. Your scores are typically based on factors like your bill-paying history, the amount of available credit you’re using, and the types of debt you have (we’ll cover these factors in more detail later).
Federal law prohibits credit scores from taking into account personal information such as your race, gender, religion, marital status, or national origin. That said, it is not necessarily true that the US financial system is unbiased, or that lending and credit scoring systems do not consider factors affected by bias. To learn more about racial justice in lending and initiatives seeking to create change, connect with organizations leading the fight, like the ACLU.
How to get your free credit scores
At Credit Karma, you can get your free Vantage Score 3.0 credit scores from Equifax and Transunion. Also get your credit score from the three major consumer credit bureaus, although there may be a cost. (You are entitled to one of each of the three credit bureaus each year, but not your scores.) You may also be able to get your scores from your Credit Card Company or lender, or from a trusted credit counselor.
Why you might have different credit scores
It’s perfectly normal to have different credit scores from different credit bureaus. Here are some reasons why your credit scores may differ. There is more than one credit scoring model. As noted above, credit reporting agencies may use different credit scoring models to calculate your scores. Since different scoring models have different ranges and factor evaluations, this often leads to different scores. Some lenders may use different types of credit scores for different types of loans. For example, a car lender may use a credit score specific to the auto industry. These scores tend to differ dramatically from standard consumer credit scores.
Some lenders may only report to one or two credit bureaus. This means that a credit bureau may not have information that could raise or lower your score. Lenders may report updates to the credit bureaus at various times. If one credit bureau has more up-to-date information than another, your scores may differ between those bureaus.
With all of these factors in play, you will often see minor fluctuations and variations in your scores. Rather than focus on these small changes, consider your credit scores as an indicator of your overall credit health. And think about how you can continue to build your credit over time.
If you think your credit scores are different because of errors on one or more of your credit reports. You can with each credit bureau. Credit Karma’s free credit observing instrument can likewise assist you with keeping steady over your credit and catch any blunders that could influence your scores.
Credit Score Ranges
Knowing where your credit score falls within the FICO and Vantage Score ranges can help you get an idea of whether you might qualify for a loan or credit card, and what type of rate you might be offered. There are some key differences between the Vantage Score and FICO models. Including how they assess various factors when determining your scores. Both have a range of scores from 300 to 850. But differ in what ranges are considered poor, fair, good, or excellent.
