Types of Credit Score

You need to take a loan, but you realize that your credit score determines your borrowing power. Lenders, utility companies, landlords, etc., use your credit score to determine if you can take a loan from them.

So what does a credit score mean?

A credit score is a figure between 300 to 850 that determines your creditworthiness. 

If you score high on the credit score, it means that lenders can trust you with their money thanks to on-time repayments of your loans and excellent credit card management.

Who evaluates your credit score?

Three major credit agencies evaluate your credit score and stores your credit history. And these include Trans Union, Experian, and Equifax.

Credit reporting agencies/bureaus use your credit report to calculate your credit score. 

 Types of Credit score models

There are two significant credit scoring models; FICO and VantageScore.

These models have a set scale to evaluate your credit score rating. 

FICO scoring model— 300-579 (poor), 580-669 (fair), 670-739 (good), 740-799 (very good), and 800-850 (excellent).

Vantage scoring model—300-499 (very poor), 500-600 (poor), 601-660 (fair), 661-780 (good), and 781-850 (excellent).

To get your FICO score, you need a minimum of one account six months old or more and an account reported to the consumer credit reporting agencies within the past six months.

VantageScore needs at least a one-month-old account and one reported to the bureau within the last 24 months.

Knowing your score is crucial whether you plan to take a loan for the first time or have experience with it. Focus on achieving an excellent credit score if you need to access affordable loans.

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Author Bio – Charity Jerop

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