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A credit score is a number ranging from 300 to 850 that depicts the creditworthiness of a person. A credit score is based on the entire credit history of the consumer. Factors include: number of open accounts, total levels of debt, repayment history, and more. Lenders use these scores to forecast how an individual will manage their finances in the future.

The three major credit reporting agencies are Equifax, Experian, and TransUnion. These three agencies handle all of your credit information and report to various entities if they request your data.


There are several types of credit scores out there but the two most known credit scores are FICO and VantageScore.


These two scores use information from the three agencies described above to generate your credit score, or credit worthiness.

Fun Fact: Credit scores were created in the 1950s by mathematician Earl Isaac.

Types of Credit Scores

There are two basic models for your credit score that the three credit bureaus create reports around.


These models are the FICO scoring model and the VantageScore scoring model. There are others out there but they are not widely used or they are scenario based (like buying a home, buying a car, etc.).

FICO Credit Scores

A score from FICO, also known as the Fair Isaac Corporation, is the most popular scoring model used in quite a bit. A FICO score can be industry-specific based on the type of loan or credit line a person is applying for. These scores can also be customized based on a specific need.


You’re probably thinking – so how can it “score” me if it can change upon request?


There are different FICO score versions and the latest is called the “FICO Score 9” which gives medical debts less weight than non-medical debt and also looks at collections a bit differently than before. The biggest improvement to this new score is that it added in alternative ways to build credit. For example, you can now have your landlord report your payments if you rent to the bureaus and it will count towards your credit.

FICO Score Key Factors Affecting Your Score: Payment History, Total Debt, Length of Credit History

VantageScore Credit Scores

VantageScore was launched through Equifax, Experian, and TransUnion back in 2006 as an alternative to the FICO score that was widely used. Your VantageScore will range from 350 to 800. In many cases VantageScore was created as a way to adjust financial liability for certain debt types, like medical debt. This score weighed medical bills much lower on the scales than FICO has in the past.


This score is widely used for those who don’t currently have a credit score or are new to building credit.


The latest version is called VantageScore 3.0 and is used by many industries. The credit card companies use VantageScore quite often and compare it to your FICO score. In many cases they check for your FICO score and if you don’t have one they back it up with a VantageScore.


The biggest advantage to a VantageScore is that any paid collections (past debt) are ignored and are not factored into your current standing. This is very useful for those who have a rocky financial past.

VantageScore Key Factors Affecting Your Score: Payment History, Age & Type of Credit, Debt to Credit Ratio

What is a Good Credit Score?

A good credit score is 650+ in both your FICO and VantageScore reports.


However, even though we say 650 or higher is “good”, that isn’t always the case.


It’s best to think about your score as kind of like your “report card” of sorts. It gives a high level grade on where you are currently but not necessarily how you got there.


Each lender treats your credit score and report differently and they have their own guidelines they judge your finances on.

Credit Score Ranges

  • > 760: Excellent
  • 700 – 759: Very Good
  • 650 – 699: Average, Fair, or Good Credit
  • 600 – 649: Poor Credit
  • < 599: Bad Credit or Subprime

Factors Affecting Credit Scores

There are a seven key factors that affect your credit score calculation that you need to be aware of. Balancing each factor is critical in making sure you get the highest credit score evaluation possible.


These factors are:

  • Payment History
  • Credit Utilization
  • Type, Number, and Age of Accounts:
  • Total Debt
  • Public Records (Repossession, Bankruptcy, etc.)
  • New Credit Inquiries
  • New Credit Accounts

The above factors are great to keep in mine when monitoring your credit. Each scoring model focuses on specific areas but it’s good to keep all of them as clean as you can.


To make sure you do that you should pay all of your bills on time, keep your debt to credit ratio below 30%, have a nice mix of accounts (credit cards, loans, car loan, mortgages, etc.), keep your total debt down for unnecessary debts, not have any public records, and limit you often you add accounts or inquires to your report.

Factors That Do No Affect Credit Scores

  • Age
  • Race, Color, Religion, Origin, etc.
  • Salary, Occupation, Title
  • Where You Live
  • Soft Inquiries

Does Checking My Credit (Or Scores) Hurt My Credit?

No. If you use a service that provides credit scores or credit reports to consumers then you will not hurt your credit in any way.


You can access your free credit report once per year and after that you have to connect with one of the service providers.


The only time your score is impacted by someone checking your credit is when a lender pulls the report for you and uses it as part of the lending process. This does impact your score by a few points but you do have a 14-day window where similar pulls won’t affect it.

How Fast Do My Scores Update?

A credit score is calculated based on the information available at that time. If new information is found, such as a reported payoff, then the next time your score is requested by a lender your score will be based on that new information.


Most scores are calculated monthly but sometimes they go in 3-month intervals based on the consumers financial background.

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