Different Types of Credit Scores

Misconceptions about credit scores abound, and 60 percent of Americans don’t know their credit score. Many aren’t aware that they can have more than one credit score. The truth is that many companies design credit score models, collect consumer credit information and generate scores based on that data and the company’s analytics.

Credit scores are intended to help lenders and other creditors get a clearer picture of a consumer’s creditworthiness. While most lenders will consider a number of other factors when making credit decisions, your credit score is still very important. A credit reporting agency will generate your score, based on its scoring model, when a creditor asks for it. As information on your credit report changes, your credit score may change, too.

The Three National Credit Bureaus

Three national credit reporting bureaus maintain records of consumer credit histories, and the information in yours is used to generate your credit report. These agencies use the information in your credit report to generate your credit score based on their own scoring models. The information in your credit report can vary from bureau to bureau because some lenders report your credit history to only one or two of the bureaus. The Fair Credit Reporting Act entitles you to a free copy of your credit report from each of the three national bureaus once a year, but it doesn’t require them to give you your credit score for free.

While the factors used to calculate your credit score can vary between credit reporting agencies, generally they include:

  • Payment history, including late payments.
  • Ratio of credit you’re currently using to the total amount of credit you have available.
  • The number of recent hard inquiries on your credit report. Hard inquiries are those made by companies with whom you’ve applied for credit.
  • Number of open installment loans.
  • How long you’ve been using credit and the average age of your credit accounts.
  • The average limit on your credit cards.

Scores from Other Credit Reporting Agencies

The three national credit bureaus may be the most well-known, but they’re far from the only companies that aggregate consumer credit information to create credit scores. A number of other companies provide credit reporting information and scores to a variety of creditors, such as landlords or utility companies. You can find a list of these companies on the Consumer Financial Protection Bureau’s website.

Some of these agencies will give you a free copy of your credit report upon request. The FCRA requires them to provide you with a free credit report if you’ve been denied credit because of something contained on their report. Regardless of whether you’ve been denied credit, the law requires all credit reporting companies to provide you with a copy of your credit report for a fee – a maximum of $11.50. However, not every credit reporting company will have a credit file on every individual.