In part, credit scores range this depends on the types of borrowers they want to attract. Creditors may also take into account how current events could impact consumers’ credit scores, and adjust their requirements accordingly. Some lenders create their own custom credit scoring programs, but the two most commonly used credit scoring models are the ones developed by
FICO® creates different types of consumer credit scores. There are “base” FICO® Scores that the company makes for lenders in multiple industries to use, as well as industry-specific credit scores for credit card issuers and auto lenders.
The base FICO® Scores range from 300 to 850, and FICO defines the “good” range as 670 to 739. FICO®’s industry-specific credit scores have a different range—250 to 900. However, the middle categories have the same groupings and a “good” industry-specific FICO® Score is still 670 to 739.
Vantage Score’s first two credit scoring models had ranges of 501 to 990. The two newest Vantage Score credit scores (Vantage Score 3.0 and 4.0) use a 300 to 850 range—the same as the base FICO® Scores. For the latest models, Vantage Score defines 661 to 780 as its good range.
Credit scores are a tool that lenders use to make lending decisions. FICO® and Vantage Score create different credit scoring models for lenders, and both companies periodically release new versions of their credit scores models—similar to how other software companies may offer new operating systems. The latest versions might incorporate technological advances or changes in consumer behavior, or better comply with recent regulatory requirements.
For example, Vantage Score creates a tri-bureau scoring model, meaning the same model can evaluate your credit report from any of the three major consumer credit bureaus (Experian, TransUnion and Equifax). The first version (Vantage Score 1.0) was built in 2006. The latest version, Vantage Score 4.0, was released in 2017 and developed based on data from 2014 to 2016. It was the first generic credit score to incorporate trended data—in other words, how consumers manage their accounts over time.
FICO® is an older company, and it was one of the first to create credit scoring models based on consumer credit reports. It creates different versions of its scoring models to be used with each credit bureau’s data, although recent versions share a common name, such as FICO® Score 8. There are two commonly used types of consumer FICO® Scores:
In general, having good credit can make achieving your financial and personal goals easier. It could be the difference between qualifying or being denied for an important loan, such as a home mortgage or car loan. And, it can directly impact how much you’ll have to pay in interest or fees if you’re approved.
For example, the difference between taking out a 30-year, fixed-rate $250,000 mortgage with a 670 FICO® Score and a 720 FICO® Score could be $72 a month. That’s extra money you could be putting toward your savings or other financial goals. Over the lifetime of the loan, having a good score could save you $26,071 in interest payments.
Additionally, credit scores can impact non-lending decisions, such as whether a landlord will agree to rent you an apartment.
(but not consumer credit scores) can also impact you in other ways. Some employers may review your credit reports before making a hiring or promotion decision. And, in most states, insurance companies may use credit-based insurance scores to help determine your premiums for auto, home and life insurance.
Other factors can also impact your scores. For example, increasing the average age of your accounts could help your scores. However, that’s often a matter of waiting rather than taking action.
Checking your credit scores might also give you insight into what you can do to improve them. For example, when you check your FICO® Score 8 from Experian for free, you can also look to see how you’re doing with each of the credit score categories.
