For most consumers, there is no “most accurate” credit score. Some scores specialize in certain types of lending and all have multiple versions. The result is a huge array of scores available to lenders and underwriters.
There is no one “most accurate” score for everyone.
For those new to credit or recovering from credit issues or those with an extensive and positive credit report or any of a hundred different scenarios, the answer could be different.
Add to that the fact that some scores specialize in certain types of lending and all have multiple versions. The result is a huge array of scores available to lenders and underwriters.
FICO vs. VantageScore: Is one more accurate than the other?
I will say that the most accurate score out there today is generally either the most recent version of the VantageScore or the FICO score. However, spending time trying to figure out which one calculates your score with the most pinpoint accuracy is not something I recommend.
Why? Because in addition to the large number of scores that potentially could be used (and while your score is a significant tool lenders use to assess your loan-worthiness), it is far from the only criteria. Your payment history may be an important factor to both your score and loan underwriting, but other factors like income, job stability and more are critical to decision making in the loan underwriting process. None of those factors are considered in your credit score.
And if that doesn’t complicate matters enough, lenders in different industries will tend to interpret the data on your credit report differently. For example, a car dealer may put more emphasis on how you’ve paid your car loan in the past while a mortgage lender may focus more on your mortgage and home equity loan experience.
While there are hundreds of industry-specific and proprietary scores out there, VantageScore and FICO are the two that are widely accepted as being accurate. FICO is up to 10 (though FICO 8 is the most widely used) and VantageScore is up to 4.0.
See related: Which credit score matters most?
How many different credit scores are there?
That’s a loaded question! Since we have already said that FICO and VantageScore are the ones most widely accepted as being accurate, we will focus on those two. But as I mentioned above, there are hundreds (if not more than 1,000) variations of scores used in scenarios as varied as approving casino credit to pricing your auto insurance policy.
Where this all gets very confusing is when we start talking about the versions of each score. FICO in particular can be hard to nail down since your score depends on only one credit report. This means you have a different FICO score from each of the three bureaus in every version. FICO also has industry-specific versions, making it all the more confusing. And don’t forget those four versions of VantageScore.
See related: Best credit cards for excellent credit
What credit score is used most by lenders?
Here again, FICO has more market share. But each lender chooses which version of either FICO or VantageScore to use when making lending decisions. This is why it can be very helpful if your lender tells you which score and bureau report they use so that you can check it for yourself prior to applying.
This is especially true when it comes to big-ticket items, like mortgages and even auto and student loans. Any score difference between what you think your score is and the score the lender gets might make the difference in what rate and terms you may qualify for. Being on the border between one range and another could equal hundreds or even thousands of dollars over the life of your loan.
FICO score ranges and factors
With that in mind, let’s talk about those ranges. FICO scores range from 300 to 850. MyFICO.com defines the ranges in this way:
- Any score less than 580 is considered poor and is well below the average score, making you a poor risk for a loan.
- Scores in the 580 to 669 range are fair and are again below the average, but many lenders will approve loans in this category (albeit at a higher rate).
- A score of 670 to 739 is near or slightly above average, making it a good score in the eyes of most lenders, which will afford you better rates
- 740 to 799 is very good, above average for most and a “very dependable borrower” for lenders, offering even better rates.
- Any score of 800 and higher is well above average and clearly puts you in the category of the “exceptional” borrower category and affords you the best rates and terms.
According to Experian, a VantageScore of 750-plus is excellent, 700-749 is good, 650-699 is fair, 550-649 is poor and 300-549 is very poor.
Being armed with this information and your own credit score will make your own borrowing decisions easier. As noted above, the difference between a good score and very good score (and all of ranges for that matter) can be only one point. Increasing a score by a few points is much easier to do than jumping from fair to exceptional.
While it is possible to get there, it takes time and patience. And remember, the higher you go the harder it can be to make the jump to the next category. And here I must caution you against chasing a perfect credit score; this can become an obsession with little or no tangible benefit.
See related: Best credit cards for good credit
What other credit scores should you track?
As I mentioned earlier, there are industry-specific scores that can be useful to know about. MyFICO.com outlines the versions used in mortgage, auto loan and credit card decisions.
Another thing to know about is your insurance credit score. This score is heavily reliant on your basic FICO score, but factors in claim history as well help to determine your rates. Certainly, I believe that while you should file any claim that is legitimate, keeping your credit score in good shape will help in this category even if you do have a few claims.
See related: What credit score is needed to buy a car?
How to maintain a high credit score
Finally, I would be remiss if I didn’t remind you of all the things you can do to keep your credit in good shape: pay your bills on time, every time. Keep your credit utilization within about 25% of your total credit, but know that those people with the best scores keep theirs in the single digits.
Don’t close old accounts, unless you have a compelling reason to do so, since length of credit history is worth 15% to your FICO score (and if it’s a credit card we are talking about, you will lose any available credit you might have on the card and impact your utilization).
If you only have credit cards in your file, you may be lacking in credit mix, so consider adding an installment-type loan to help this part, which counts for 10%. But remember to only apply for new credit when you need it and when you are confident you will be approved because this category counts for 10% of your score. And hard inquiries can lower your score whether you are accepted or not.
Remember to keep track of your score!