The Credit Score Hub

What is a credit score?

A credit score is a three-digit number, typically ranging from 300 to 850, designed to represent your overall credit risk. It's essentially a summary of your credit history. Lenders use these scores to evaluate how likely you are to repay debts on time. The higher your score, the more financially trustworthy you appear to lenders, unlocking better interest rates and loan terms.

FICO vs. VantageScore

There are two main scoring models used today: FICO (Fair Isaac Corporation) and VantageScore. While they have different calculations, they both aim to predict credit risk. Both scale from 300 to 850.

• FICO Score: Used by over 90% of top lenders. If you apply for a mortgage or a major loan, this is almost certainly the score the lender will pull.
• VantageScore: Created jointly by the three major credit bureaus (Experian, Equifax, TransUnion). It's most commonly seen on free credit checking apps and websites.

The 5 Factors That Make Up Your FICO Score

1. Payment History (35%): Do you pay your bills on time? Even one missed payment can significantly drop your score.
2. Amounts Owed / Credit Utilization (30%): How much of your available credit are you using? Keeping your balances low (ideally under 30% of your limit) helps your score.
3. Length of Credit History (15%): Lenders like to see an established track record. Keeping older accounts open helps.
4. New Credit (10%): Opening several new accounts in a short time represents greater risk and can lower your score due to "hard inquiries."
5. Credit Mix (10%): Having a healthy mix of revolving credit (credit cards) and installment loans (mortgages, auto loans) positively impacts your score.

Credit Score Ranges: What Do They Mean?