The Different Credit Scoring Methods You Should Know About


The credit score. This is a number that many people worry about, focus on and are continuously trying to improve but did you know that there are different credit scoring methods used by the credit bureaus and by lenders?

"While there are many different credit models that exist out there, the general rule is, the higher your credit score the better."

Let's talk about some of the different types of credit scoring methods that exist.

The Different Credit Scoring Methods

1. The FICO Score

The FICO scoring method is most popular and was created by a company called, you guessed it, FICO (Formerly called The Fair Issac Corporation). In order to create your score, they leverage credit information provided by one of the three major credit bureaus -Experian, Equifax or Transunion. While lenders have a choice of credit scores to use when evaluating you for credit, the FICO score is the most popular score.

Factors that are used to calculate your FICO score include payment history, debt owed, an age of credit, new credit/inquiries and types of credit. All of these factors are considered in other credit score models as well so if you have a good FICO score you can safely assume your other credit scores will follow suit. Keep in mind that FICO has more than one scoring method depending on the type of loan you are applying more i.e. Auto vs. Home. Also, 90% of the top lenders use FICO scores. The FICO score range is from 300 to 850.

2. The Vantage Score

The VantageScore (Current version is VantageScore 3.0) is the FICO score's main competitor. This credit scoring method was created by the three major credit bureaus - Experian, Equifax, and Transunion - in 2006 with a goal of creating a more consistent credit scoring method due to all the different kinds of credit scoring models that exist.

It uses credit information from all three bureaus but that being said, your VantageScore might not match across all 3 lenders due to things like the date when your score was pulled and when lenders provide reports on your credit to the different credit bureaus.

Factors that are used to calculate your VantageScore include payment history, credit utilization, type of account and age, total balances, credit behavior and available credit (Just like FICO and other credit scoring methods).  The VantageScore also ignores all of your paid collection accounts including paid or unpaid collections that are under $250 AND negative impacts on credit caused by natural disasters.

Most of the top lenders (20 of the top 25) use the VantageScore and according to US, VantageScore credit scores were used more than 6 billion times from 2014 to 2015. The VantageScore 3.0 range, similar to FICO, is from 300 to 850.

3. The Beacon Score (a.k.a  Equifax FICO Risk Score)

This credit scoring method was developed by the Equifax credit bureau (trademarked and proprietary) to determine and rank an individual's creditworthiness. The data used to support the calculation of this score is based on the credit data Equifax has on an individual. The score range is from 280 to 850. Note: This score method can also be used to calculate your creditworthiness with Transunion and Experian.

4. The Empirica Score

This credit scoring method was developed by the Transunion credit bureau (trademarked and proprietary), is a score only provided to lenders and is based on FICO. Just like the Beacon score, lenders use the Empirica score to determine creditworthiness. The score range is from 150 to 934.


While there are many different credit models that exist out there, these are the most popular ones and the general rule is - the higher your credit score the better. When applying for credit, you can ask your lender what credit score or scores they will be basing their decision upon.

However, regardless of whether you are applying for credit or not, it is a good idea to monitor your credit report so you are aware what is being reported, can catch inaccuracies right away and to protect yourself from credit fraud.