Credit score range experian11/23/2023 Major changes in scoring algorithms are usually tested to see how well they predict future creditworthiness. In any case, it does not result in a significant difference in scores. I believe they do this to distinguish themselves from their competitors. Moreover, the credit reporting agencies will use slight variations of the FICO credit score to develop their own version, which usually comes with a different name. The credit reporting agencies and FICO frequently test different scoring algorithms, assigning them names over different time periods, which may change later on, even for the same credit scoring procedure. When the procedures change, even slightly, the credit score generated from the new procedure will be given a new name. FICO has also developed the FICO Resilience Index to predict delinquencies during economic downturns, which ranks consumers from the most likely to become delinquent to the least likely.Ĭredit score numbers depend on the procedure for calculating those numbers. The CRAs have also developed their own credit score, called the VantageScore. A few scores depend on information that is not normally present in credit files, but the consumer must opt in to share that information. Virtually all credit scores depend on information contained within the credit files held by the 3 major credit reporting agencies ( CRAs): Equifax, Experian, and TransUnion. Most lenders use some version of the FICO score, which, according to FICO, is used by 90% of lenders to determine the credit worthiness of their borrowers. Credit Score NamesįICO is the main developer of credit scores, of which there are many versions. How credit scores are used and how they predict future creditworthiness is detailed in Credit Scores. Credit scores differ by how much weight they give to each factor. The primary purpose of credit scores is to predict future creditworthiness by looking at past creditworthiness, under the assumption that the past prognosticates the future, so the major credit scores use the same type of information, specifically: payment history, amount of debt, length of credit history, the total credit available to the borrower, the amount of credit that the borrower has recently obtained, and the number of times that the borrower has recently sought credit, called credit inquiries. The main competition to the FICO score is the VantageScore, which was developed by the 3 major credit reporting agencies - TransUnion, Experian, and Equifax - who also provide the data for calculating the FICO score. Other providers of credit scores offer lower rates for the lenders or use other information to assess borrowers who do not have much of a credit history. The primary credit score used by most lenders is the FICO credit score, because it is deemed best at predicting future creditworthiness. Lenders choose the credit score they want to use, and 2 factors determine their choice: cost and the predictive value of the credit score, especially in regard to the probability that a borrower will default. Other sources of information may include payment history for rent, utilities, and other regularly recurring bills. All credit scores are based on statistical analysis of data, and most credit scores use the data in credit reports, which are compiled by the 3 major credit reporting agencies. Higher credit scores usually result in lower interest rates for the borrower and under better terms. Credit Score Types and Versions: FICO Scores, VantageScores, and Others › Money › Credit and Debt Credit Score Types and VersionsĬredit scores are used by most lenders and credit card providers to assess the creditworthiness of credit applicants, to determine whether credit should be extended to them, and if so, at what interest rate.
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