When it comes to making a large purchase, like a home or a car, your credit score matters. Like most people making these purchases, you’ll need to apply for a loan to cover the cost. Before a bank checks your credit score, you may want to know what that score means.
The Big Three
In the United States, there are three national credit bureaus that record and document consumer credit histories. These are TransUnion, Equifax and Experian. While other credit-rating businesses exist, your bank or lending institution will likely pull your score from one of these three. That’s why it’s important to understand the numeric scale that each uses. While all three calculate their scores using software developed by The Fair Isaac Corporation, the numeric range for each bureau varies slightly.
More than 90 percent of lenders in the United States use scores based on the FICO model to determine creditworthiness. The FICO scale ranges from 300 to 850, with a zero score signifying the absence of credit entirely. Since TransUnion, Equifax and Experian all use the FICO model, their numeric scales are similar. That said, each bureau may report different information, and the scale at each varies slightly.
TransUnion’s credit-rating scale is the same as the FICO score: 300 to 850. This score is called the FICO Risk Score, Classic. Experian also uses the FICO Risk Score, Classic, but reports a different range of scores, from 330 to 830. Equifax calls its score the Beacon Score and uses a scale ranging from 280 to 850. Regardless of the slight variance in each bureau’s scale, a high score in any of these three indicates low lending risk, while low scores indicate high risk.
Your credit score from all three national credit rating bureaus should be similar, despite the slight variances of scale. Do not expect your score to be the same at each bureau. TransUnion may have different information on file than Equifax, and Equifax may have different information on file than Experian. In order to have a credit score at all, you’ll need to have at least one current, undisputed credit account that has been open for at least six months.
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