What do you mean 'a version'? There's more than one?
Per FICO, there are 19 major versions of its score in use today. And FICO's not the only name in the game. Other analytics companies -- the other big name you may have heard is VantageScore -- sell their own versions of credit scores to lenders and service providers.
But, "FICO is kind of like the Kleenex of credit scores," says Kelley Long, a member of the National CPA Financial Literacy Commission under the American Institute of CPAs, or AICPA. "Even though there are a lot of brands of tissue out there, we all call it Kleenex."
That's confusing. If there are so many scores, how can I tell whether mine is good?
Well, most FICO scores -- and many of its competing models -- utilize a 300- to 850-point range to grade consumers. There's no hard or fast rule on what score within that range will get you a loan or, subsequently, the very best interest rate on it. But, generally, "you can get the best rates on just about any type of loan with 760" or higher, Paperno says. "A low score would be below 650."
Anything in between is a bit of a dice roll. It's up to the lender to decide its official cutoffs. (This Bankrate analysis provides a few more insights into how credit score tiers may affect interest rates in the mortgage, auto and credit card industries.) But you shouldn't get hung up on the number anyway.
Wait ... what?
"Different teachers grade different ways," Long says. So focus, instead, on the factors that are driving your grade. These factors -- along with some personalized explanations regarding them -- are generally listed alongside any version of the FICO score you obtain. "This information gives consumers insight into the steps they can take to manage their credit," FICO spokesman Jeffrey Scott says.
Moreover, be sure to check your credit report because it contains the information on which all credit scores are based. "More important is making sure what's on the report is accurate and (that) you know what things impact your score across the board," Long says.
Worried there may be mistakes on your credit report? Check it for free at myBankrate.
What will impact my score?
FICO scores are based on five major categories, listed, essentially, in their order of importance:
- Payment history. (Do you pay all your bills on time?)
- Amounts owed.
- Length of credit history. (How long have you been taking out loans?)
- New credit. (Have you been shopping around for new accounts?)
- Types of credit in use.
Are there ways to ensure I score well in these categories?
Sure. "Pay all your bills on time, every time," Scott says. "Keep revolving credit balances low (and) apply for new credit only when it is needed." Beyond that, building a solid score -- or repairing a shoddy one -- takes time.
"Most negative information is off (your credit report) after seven years," Paperno says. Fortunately, the older the information is, the less of an impact it will have. So, for instance, "if you were late in the past and you're not late now, just continue to pay on time" and your score will slowly rebound, Paperno says.
Where can I learn more?
FICO says consumers can visit myFICO.com and ScoreInfo.org if they're looking for more information on its score. You can also take this Bankrate quiz if you're interested in learning about credit score basics. Check out this story for tips for boosting your credit score.