1. The Recipe
Both FICO scores and other credit scores use similar ingredients from your credit report, like how timely you pay your bills, how much debt you’re carrying, and how long you’ve had credit. But they mix these ingredients a bit differently, which means your score can vary depending on the recipe (aka scoring model) used.
2. The Scale
Most credit scores, including FICO, use a scale from 300 to 850. Higher scores are better because they show you’re a lower risk to lenders. But not all scores use this exact scale, so a score from a different model might not directly compare to a FICO score.
3. The Versions
Just like your favorite apps get updates, FICO scores have different versions. Lenders might use different versions for different types of loans. There are also industry-specific FICO scores tailored for things like car loans or credit cards. Other credit scoring models might not have as many versions or specific uses.
4. The Availability
You can often get your FICO score from your credit card company or bank as a perk. Other scores, like the VantageScore (another popular type), might be provided through free credit score websites or financial management apps.
5. The Acceptance
FICO scores are used in over 90% of lending decisions in the U.S., which makes them pretty important when you’re applying for loans. Other scores can give you a good idea of where you stand, but they might not be the exact scores a lender looks at when you apply for credit.
Why Does It Matter?
Understanding the difference between FICO scores and other credit scores can help you make better financial decisions. If you’re applying for a big loan, like a mortgage, you’ll want to know your FICO score since it’s likely what the lender will use. But if you’re just keeping an eye on your financial health, checking any credit score regularly can help you stay on track.
Keeping Your Scores Healthy
No matter the type of score, the basics of keeping your credit healthy remain the same:
- Pay on time: Late payments can hurt your scores.
- Keep balances low: Using a smaller portion of your available credit is better for your scores.
- Hold onto old accounts: Older accounts can help increase your credit history length, which can boost your scores.
- Limit new credit: Opening a bunch of new accounts in a short time can be a red flag to lenders.
The Bottom Line
FICO scores might be the big name in the credit score world, but they’re just one part of a bigger picture. Whether you’re checking your FICO score or another type of credit score, the key is to use that information to make smart financial choices. By understanding how credit scores work and what they reflect about your financial habits, you’re taking a big step toward financial savvy. So, next time you hear “FICO” or “credit score,” you’ll know exactly what’s up and why it matters.
