Understanding Credit Scores

December 11, 2019

Your credit score is the most important factor in determining what rate you will pay when you borrow money. Your credit score, quite simply, could cost or save you hundreds or thousands of dollars a year, depending on how much debt you have.

Lenders view your credit score as a representation of your creditworthiness or how likely you are to repay debt. What many people do not realize is how many different credit scores there actually are. Credit scores are derived from many components in a credit report including the length of your credit history, your total current debt, recent credit inquiries, and the number of late payments or defaults you have made.

Here is a short overview of the the most common credit scores:

FICO Score

FICO is the most commonly used credit score and has been in use since the 1970s. As previously discussed here on the Lending Club blog, FICO stands for Fair Isaac Corporation, which is the company that created credit scores. A credit score is based primarily on a credit report. There are three different credit bureaus that produce credit reports – Experian, TransUnion, and Equifax. Creditors choose what bureau(s) they want to report to and often only report to one or two of the bureaus. As a result, an individual can have three different FICO scores because the bureaus have information that is inconsistent with each other, in addition to the fact that they use different formulas. In fact, according to myfico.com, “30% (of people) have FICO scores that vary by as much as 50 points across their three scores.” FICO scores range from 300-850.


This is a new scoring model created in 2006 by the three major credit reporting companies. Like FICO scores, VantageScores can vary across the three credit agencies, but according to the FAQ, “gaps among the results generated via VantageScore are diminished because the credit scoring model itself and the underlying credit characteristics in the algorithm are the same at all three CRCs.” VantageScores range from 501 to 990.

Experian PLUS score

Experian claims to use a “similar” formula as other lenders when calculating their PLUS score, where PLUS stands for Plan, Live, Understand, Succeed. A PLUS score ranges from 330 to 830. Note: The Experian PLUS score is different than the Experian Scorex PLUS, which is not available for consumer purchase.

TransUnion TransRisk Account Credit Score

The proprietary TransUnion score ranges from 300 to 900. TransUnion also offers separate Home and Auto Scores which range from 150 to 950.

Equifax Score Power

This is the name Equifax gives to the FICO score based on Equifax’s credit report.

It is important to note that even if the score ranges are similar, the score themselves are not comparable. A 760 FICO score is not the same as a 760 Vantage Score or a 760 PLUS score.

In addition to all these scores, there are some other custom models which may emphasize a particular part of a credit report.

While you can get your credit report for free once a year, you must pay an additional charge to see your credit score. If you decide to pay the fee to see your credit report, make sure you are ordering the one you need.

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