Your credit score is a key part of your financial life, but it can be confusing. Two scoring model companies, VantageScore and FICO, provide the majority of credit scores to lenders.
It's a good idea to keep track of your scores with both companies, but FICO is the more important of the two. Below, CNBC Select reviews why it's important to know your current FICO score, what the scores mean and how to get your score for free.
Know your FICO score
- Why you need to know your FICO score
- How is my FICO score calculated?
- The 5 FICO score ranges
- How often to check your credit score
- How to check your credit score for free
- Bottom line
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Why you need to know your FICO score
Your credit score impacts whether you'll get approved for a credit card, mortgage and other financial products. It can also be a consideration when you're trying to get an apartment or even applying for a job.
Though FICO and VantageScore consider similar data, their formulas are somewhat different and the credit score each generates for you will likely vary. FICO says its scores are used in 90% of lending decisions in the U.S, so knowing your FICO score will give you a better idea of whether you'll qualify for a loan or line of credit.
If you have a credit history, you actually have dozens of different FICO scores, which vary depending on what financial product you are trying to get approved for. A mortgage company may use FICO Score 5, which ranks aspects of your credit history differently than FICO Score 8, most often used by credit card issuers.
Here are the most common FICO score versions and what they're used for:
- Credit card companies:FICO Score 3 and 9; FICO Bankcard Scores 2, 4, 5, 8 and 9
- Auto lenders:FICO Auto Scores 2, 4, 5, 8 and 9
- Mortgage lenders:FICO Scores 2, 4 and 5
- Newer versions:FICO Score 10, FICO Score 10 T, FICO Auto Score 10, FICO Bankcard Score 10
How are FICO scores calculated?
FICO 8, the most widely used version, offers a broad overview of your credit. It is a number between 300 and 850, calculated using five key metrics.
- Payment history (35%):Whether you've paid debts on time
- Amounts owed (30%):The amount of credit you're using compared to your total credit limit, also known as yourcredit utilization rate
- Length of credit history (15%):The amount of time you've had credit
- New credit (10%):How often you've applied for and opened a new account
- Credit mix (10%):The variety of credit products you have, including credit cards, installment loans and mortgages.
Other versions of FICO also range between 300 and 850, but weigh the metrics differently.
The 5 FICO score ranges
When checking your FICO score, it's important to know where you fall within the different scoring ranges. Those in the "good" to "exceptional" ranges have better odds of approval and get offered the lowest interest rates.
Below are the five FICO score ranges:
- Poor:300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Exceptional:800 to 850
How often should you check your credit score?
Your FICO score changes wheninformation on yourcredit reportgets updated, which varies from person to person. Generally, however, you can expect an update at least once a month (more often if you have multiple credit products under your name).
So, it's a good idea to check your score with all three reporting agencies at least once a month. Most credit monitoring services send updated scores and alert customers about unusual activity.
Experian IdentityWorks℠ Premium reviews data from all three credit bureaus and provide regular updates on your basic FICO score from each. It also informs you about score changes,new inquiries, changes to your personal information and suspicious activity.
Experian IdentityWorks℠
On Experian's secure site
Cost
Basic: Free; Premium: 7-day trial, after $24.99 per month; Family: 7-day trial, after $34.99 per month
Credit bureaus monitored
1-bureau credit monitoring, alerts and reports: Experian, with Basic plan only and 3-bureau credit monitoring, alerts and reports: Experian, Equifax and TransUnion®, with Premium and Family plans only
Credit scoring model used
FICO® Score 8, with all plans
Dark web scan
Yes, with all plans
Identity theft insurance
Yes, up to $1 million with all plans
Terms apply.
*Identity Theft Insurance underwritten by insurance company subsidiaries or affiliates of American International Group, Inc. (AIG). The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions.
The advanced version ofMyFICO® includes numerous FICO scores, as well as access to $1 million in identity theft insurance and 24-hour expert help if your identity is compromised.
FICO® Basic, Advanced and Premier
On myFICO's secure site
Cost
$29.95 to $39.95 per month
Credit bureaus monitored
Experian for Basic plan or Experian, Equifax and TransUnion forAdvanced and Premier plans
Credit scoring model used
FICO
Dark web scan
Yes, forAdvanced and Premier plans
Identity insurance
Yes, up to $1 million
Terms apply.
How to get your FICO score for free
Most banks and credit card companies provide cardholders with a free credit score at least once a year. Make sure your institution uses FICO, though, and not VantageScore or another model.
In addition to linking phone, utility and streaming service payments to your Experian credit report, *Experian Boost™ provides regular updates on your Experian FICO score.
You can get a free copy of your credit report from each of the three major consumer reporting companies by visiting AnnualCreditReport.com. These reports do not include credit scores, but reviewing the information on them can bring to light any errors that are hurting your score.
Bottom line
Your FICO credit score influences whether or not you'll get approved for loans and lines of credit. Knowing your score will save you time when applying for a mortgage, credit card or car loan — and enable you to work addressing in your credit history.
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Read more
What is a FICO score and why is it important?
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What credit score do mortgage lenders use?
How to find out if there are mistakes in your credit report
*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
