A credit score is a three-digit number that summarizes your creditworthiness, predicting how likely you are to repay borrowed money. Lenders use credit scores to assess risk when deciding whether to approve loans, credit cards, and other forms of credit. There are various credit scoring models, but FICO Score is the most widely used.
FICO Score vs. Other Credit Scores
While the terms “credit score” and “FICO Score” are often used interchangeably, FICO Score is a specific type of credit score developed by the Fair Isaac Corporation (FICO). FICO Scores range from 300 to 850, with higher scores indicating lower risk. Other credit scoring models, such as VantageScore, use different algorithms and may have different score ranges.
While FICO is the dominant scoring model, lenders can also use other credit scores or develop their own proprietary models. This means the specific score a lender uses to evaluate your application might not be the same as the CreditWise score you see, which is calculated using the VantageScore 3.0 model. Factors like payment history, amounts owed, length of credit history, new credit, and credit mix are generally considered across different models, but their weighting can vary.
Why the Difference Matters
Understanding the difference between FICO Scores and other credit scores is important because different lenders might use different models. While a good CreditWise score is a positive indicator of your overall credit health, it’s not a guarantee of approval from every lender. Creditors may use a different scoring model or consider additional factors beyond your credit score. Therefore, monitoring your credit reports from all three major credit bureaus (Equifax, Experian, and TransUnion) can give you a broader picture of your creditworthiness.
Key Takeaway
While “credit score” is a general term, FICO Score is a specific and widely used type of credit score. Understanding this distinction helps you manage your credit health more effectively. Keeping track of both your FICO Score, if possible, and other credit scores like VantageScore can provide a more comprehensive understanding of your creditworthiness from different perspectives.
