The three credit bureaus (Equifax, Experian, and TransUnion) developed their own scoring system called VantageScore. The goal is to standardize the score but still has a long way to go before it becomes widely used. The VantageScore credit score has gone through a number of iterations most notable is the change of their credit score range from 501-990 to the similar FICO range of 350-850.
The most common credit scores are commonly referred to as FICO. FICO is an organization that created algorithms to determine the risks of potential borrowers. The credit bureaus began providing the scoring along with the credit reports they provide to consumers and creditors.
There are many ways credit scores are calculated. There is no one real credit score. In fact, the credit scores that your lender uses may be different from the scores you get from FICO itself. All these scoring methodologies all use the same information found in your credit report, however, calculations to come up with your credit score.
VantageScores uses six factors to calculate credit scores
|Payment history||how timely and consistent your payments are||28%|
|Credit utilization||debt-to-credit ratios and how much credit is available||23%|
|Credit balances||what your total debt is; most likely, delinquent debt is counted more harshly than current debt||9%|
|Depth of credit||length of credit history and types of credit previously received||9%|
|Recent credit||how recent and many new hard inquiries and new accounts there are||30%|
|Available credit||how much credit can be accessed, for example, could you spend $50,000 of credit tonight or within the next week||1%|
What doesn’t count
Lots of things don’t factor into the VantageScore model — or any other credit scoring model, for that matter — including race, color, religion, nationality, gender, marital status, age, salary, occupation, title, employer, employment history, where you live, or even your total assets.