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The different credit scoring models

An explanation for why there's different types of scoring models and how it effects your credit score.

If you have seen your score differ among the credit reporting bureaus, on websites, or elsewhere, it is because there are several bureaus rating your credit for various purposes. It may be as simple as the type of credit you’re applying for, or as complex as honing in on consumer trends and forecasting consumer behavior. We’ve provided an overall view for you, as well as offering much more specific information if you’re interested. The farther down you read, the more details you’ll learn.

FICO and the Three Major Bureaus

You’ll hear the term “FICO” tossed around a lot when it comes to credit scores. This is because FICO – the Fair Isaac Corporation Inc – is the primary player in credit scoring. FICO is the score most commonly used by lenders. However, when you run your personal credit report, FICO is not the most common, so your score may be different.

The three major credit reporting bureaus collect data about a consumer's financial history to compile a credit report. The data from these credit reports are used to calculate your score. So now you can see that there are at least three different FICO scores, since the data at each bureau may differ.

The traditional FICO score does not take rent payments into account. However, the new FICO 09 score will start to take rent payments into account, and as lenders switch to this new model, your on-time rent payments could give you an advantage.

Vantage Score

The Vantage Score is the first credit scoring model that was developed collaboratively by Experian, TransUnion, and Equifax in order to create a new standard in the market. It was created through the analysis of approximately 15 million anonymous consumer credit profiles pulled from all three national credit reporting agencies. Using a characteristic leveling model, Vantage Score interprets the same data from different sources (the three national credit bureaus) in the same manner. By using the same scoring model across all three credit reporting agencies, Vantage Score increases consistency and predictability. It’s based on a 24 month performance period and scores range from 300-850, just like the FICO score. The higher the score, the lower the lender’s risk.

The Vantage Score was also one of the first scores to incorporate rental payment data into its algorithm. This is why RentTrack shows renters their Vantage Score, rather than their FICO score.

Many More Scores

Each of the credit reporting bureaus also has its own credit scores that they calculate from their collected data. For example, you may see the "PLUS" score from Experian or the "TransRisk" Score from TransUnion and other third-party scores. All of these scores may be marketed as your “credit score.”