Let’s cut to the chase. The score itself isn’t important and here’s why:
Your credit score is anyone’s guess because it isn’t something that one can nail down because so many banks, lenders, credit grantors et al use various scoring models to grant you credit of any sort. The algorithms used to determine the scores are different and always changing. Not to mention that they aren’t typically available to the public. So in essence you’re stuck chasing a score that maybe your creditor doesn’t even use!
Here are the most popular scoring models and their respective ranges:
- Equifax BEACON Score: 300 – 850
- Experian CE Credit Score: 330 – 830
- FICO Score: 300 – 850
- TransUnion TransRisk Score: 300 – 850
- VantageScore (collaborative between Equifax, Experian, and TransUnion): 501 – 990 (also assigned a letter grade, A – F) (Source: CreditKarma)
Which one does your bank use? Are you chasing a FICO score when your bank uses Vantage? Or do you only have access to your Experian score and you really need to see the other two: Transunion and Equifax?
Which Score Can You Trust?
That depends. Which score does your bank use? Call them up and speak to someone in the credit department and find out which scoring model they use to determine credit and then follow that one. If you’re like me then you tend to bank with 1-2 banks because of a longstanding financial relationship which increases the chance of being approved for credit based on a favorable history. If not, then whoever you have credit with, find out who they use and then take it from there. It doesn’t make sense to follow FICO if none of your creditors use it to determine credit worthiness.
This is important: know which score your bank uses and start there. I would get my credit reports from Experian, Transunion and Equifax and make sure that the information on each bureaus report all line up with each other.
Specifically, derogatory information. You want to make sure that that zombie debt from 1995 isn’t sitting on your Experian report while it was deleted from the other 2. Likewise with positive information, if you have a great payment history on one account that isn’t reporting consistently, then you need to make sure that you call your creditor to make sure this is being reported consistently and accurately. This is because the bureaus farm out your information to other companies who then use that information to create their own scoring model using their algorithm.
If The Score Isn’t Important Then What Is?
Here’s what’s important, focus less on the score and more on what’s in your credit report:
- Payment history
- Credit utilization (keep below 30% of balance)
- New credit (applying in a flurry for new credit dings your score)
- Derogatory items: late payments, collections, judgements and liens
Keep those items in tip top shape and you should be good to go because they tend to be the pillars of credit worthiness with any credit bureau. The other minor factors tend to be: types of credit and length of credit but I refuse to go out and get more credit to vary my credit profile to increase my score. And, I wouldn’t recommend that you do that either. Credit is a tool, not a game. If you’re not skilled in the art of resisting the temptation then keep it simple.
I recommend tracking your 3 bureau reports with True Credit or Equifax. Both are great programs to get your started with knowing what’s on your credit report: