You don’t have just one credit score — you have many, and they change constantly.
The scores most often used in lending decisions were introduced by the Fair Isaac Corp. more than 25 years ago and are known as FICO scores. VantageScore, developed jointly by the three major credit bureaus and introduced in 2006, is FICO’s main competitor.
FICO and VantageScore each use a proprietary formula designed to predict how likely you are to repay a loan or credit card balance as agreed. They make money each time a lender uses their formulas to make a lending decision.
The formulas are applied to data in your credit report from each of the three major credit bureaus: Equifax, Experian and TransUnion. That’s why the same credit scoring formula can generate three different results. (That’s six scores already, if you’re counting.)
Even the same score has different versions
The reasons your credit scores differ can go beyond which bureau’s credit report is used or whose formula, or algorithm, generates the result.
Credit score algorithms are revised from time to time, and creditors may be slow to adopt a newer one. It’s sort of like choosing to use Windows 7 even though Windows 10 is available. The FICO 8, introduced in 2009, is in widest use — but several previous generations are also still in use, as is the newest version, FICO 9.
VantageScore’s most recent version, the 3.0, was introduced in 2013.
If you want to track your score over time, you’ll want to use not only the same brand of score but the same version of it as well. That helps screen out fluctuations due to which bureau’s credit report is used and which formula interpreted it.
The differences between FICO and VantageScore
FICO is more widely used by lenders. VantageScore, however, is gaining traction with both consumers and lenders.
Differences in FICO 8 (the most widely used version) and VantageScore 3.0 (the current version) include:
How paid-off collections are treated: Although they remain on your credit report for seven years, VantageScore 3.0 disregards paid-off collections for scoring purposes. The newer FICO 9, not yet in wide use, also discounts paid-off collections, but FICO 8 does consider them.
Use of so-called alternative data: If things like rent or utility payments are reported, VantageScore includes them in scoring. (FICO, along with partners Equifax and LexisNexis Risk Solutions, is pilot-testing an alternative score called the FICO XD.)
How long a person needs to have had credit to generate a score: With FICO, it’s six months, but VantageScore can generate a score after 30 days.
How recently a credit account was used: For FICO, at least one account has to have been used in the past six months; VantageScore looks back 24 months.
One credit history, many credit scores
If you apply for credit, you don’t get to choose which score is used to assess your creditworthiness.
Many lenders check only one credit bureau’s score and/or report, because they pay for each inquiry. For big purchases such as a house, a lender might look at information from all three credit bureaus.
Your score is also not static. It’s calculated on demand, and fluctuations are normal. Think of it like a blood test: The values may change, but as long as they stay within a healthy range, it’s of little concern.
The variations are almost endless, but they all weigh your credit history — which you control. And the things you do to improve your credit will work on all of them.
But wait, there are even more credit scores
It’s also not uncommon for a lender or retailer to tweak a score slightly to customize it.
Information from your credit report is the fuel for specialty credit reports that zero in on a particular kind of risk.
Auto loan scores, for example, weigh whether you’ve made your car payments on time in the past more heavily than some other scores do. You have specialty scores developed for credit cards, auto insurance and mortgages, as well.
How to get a free credit score
Several credit card issuers and personal finance websites, such as NerdWallet, now offer free credit scores. Consider choosing an online source that also offers free credit report information and education tools such as a credit score simulator.
Other specialty scores are available for landlords, insurers, banks and more. The Consumer Financial Protection Bureau has a list of consumer reporting agencies that may have data about you. You have a right to see the data, and in most cases it’s free. (The CFPB document has instructions on how to decide which reports are most relevant to you and how to request them.)
Updated Oct. 27, 2016.