Hand downs and without question, Fico scores are used the most frequently when banks and lenders decide whether to extend new credit to consumers.
So when you apply for a credit card, an auto loan, or a mortgage, there’s a very good chance the financing company will rely upon a Fico-based credit score when pulling your credit.
[Are credit scores and Fico scores the same?]
And while their current market share is unknown, it’d be safe to say that Fico holds upwards of 80% of the credit scoring market.
In fact, their only real mainstream competitor is VantageScore, which was created just five years ago and has yet to grab a sizable amount of the market.
So we know a Fico-based credit score will likely be used, but that doesn’t take all your worries away.
Which Fico Score Will Be Used?
You see, there are multiple versions of the popular Fico score, and also different credit reporting agencies that use the Fico scoring algorithm.
For example, there are models of the Fico score used by auto lenders that may differ from the scores pulled by mortgage lenders because they are calculated differently.
And some may even have different credit scoring scales, so instead of the standard 300-850 credit score range most of us are familiar with, you may see a range of 250-900 instead.
As far as the credit reporting agencies go, you may receive a Fico-based credit score from Equifax, Experian, or TransUnion.
And all of them will probably differ, depending on what data they report, when it is reported, and how it is reported. In fact, it’s more likely that your 3 credit scores will be different than the same.
So your Fico score with Equifax could be 700, while your Experian credit score is 730 and your TransUnion score is 760.
This array of credit scores could make or break you, depending on the requirements of the creditor.
If the lender needs a minimum credit score of 730, but pulls only your Equifax Fico score, you’d be out of luck.
That’s why all 3 credit scores matter, because you never know which one will be utilized.
Additionally, if you apply for a mortgage, there’s a good chance the mid-score of the three will be used.
[What credit score is needed to buy a house?]
So in our example above, the 730 credit score would be used to make the lending decision.
The Good News
As you can see, there are a ton of credit scores out there and plenty of divergence among them.
While this may sound like bad news, the good news is that pretty much all credit scores share the same basic characteristics.
In short, a good credit score, regardless of which company provides it, is achieved by paying all bills on time, keeping outstanding balances low, and applying for new credit sparingly.
The final ingredient is time. Without it you can’t achieve trust. So be patient.
But if you follow these simple rules, you should be golden no matter who comes up with your credit score.
Read more: Which credit bureau is most important?