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Which Credit Score Is Most Important,

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credit reports and scores
There’s one pesky number that pretty much defines you as a credit-worthy consumer — or not: your credit score. Affecting everything from whether you can get a loan or good credit card to how much you’ll pay in interest, those three digits have an outsize influence on your financial life. But the weird thing about credit scores,

You actually might have a bunch of different ones, all at the same time. This discrepancy in your scores can be confusing, but the good news is you usually don’t have to stress about it, experts say. Instead of fretting about minor discrepancies in your score, you should first make sure the information on your (free!) credit report is accurate and that you’re monitoring at least one of your reports each year.

“It is most important to know what is on your credit report,” Jeanne Kelly, a credit coach at Jeanne Kelly Academy said in an email. But if you want a better understanding of how credit scores are generated, read on. Here are five key things to know — including how to take better control of your credit. 1. You have more than one “real” credit score.

While everyone talks about their credit score as if it is a single number, you actually might have more than a thousand of them. Credit scores are generated by many companies but two are the best known: Fair Isaac and VantageScore. Fair Isaac uses a proprietary formula to generate your FICO score, while VantageScore, which was developed by the credit reporting agencies Equifax, Experian and TransUnion, uses a different formula to generate the eponymous VantageScore.

But just because there are two main companies generating your credit score, that doesn’t mean you only have two scores. At any given time, you have multiple FICO scores as well as multiple VantageScores, because credit reporting agencies, mortgage issuers and credit card companies all generate scores of their own, some of which are based on your FICO or VantageScore.

For example, Citi uses the FICO Bankcard Score 8 model, which is scored on a scale of 250 to 900 and is based on data from Equifax. Why do we need so many credit scores, Because different lenders focus on different factors in determining the likelihood that a consumer will default on a loan. “Companies and lenders have created different credit scores to account for those differences and adapt them for their needs,” said Bethy Hardeman, a chief consumer advocate at Credit Karma. They “just weigh different factors or time periods differently,” Hardeman added.

For example, some may weigh your credit utilization more heavily than the average length you’ve had accounts open. 2. Your scores may also be calculated based on different information. Not only do lenders use different formulas to calculate your credit worthiness, but they also may be drawing from slightly different information to determine your score.

“You also have Experian, TransUnion and Equifax, so you have three different credit reports with different information,” Kelly said. While your credit reports usually should have a lot of overlap based on what they contain, not all lenders report to the same credit card bureaus, and lenders report to different credit bureaus at different times, Credit Karma explained.

3. You’ll never know all of your credit scores. If you like to be in the know, you might want to find out what all of your different credit scores are. While you can easily get some scores from free services and your card issuers, there are some scores you’ll never know.

That’s because lenders typically keep their own formulas a tightly held secret and won’t share how they’ve scored you. “The credit scores a lender will use will most likely differ from any score you can get yourself,” Hardeman said. 4. You (usually) don’t have to stress about the differences in your scores. If you’re worried about whether one lender’s wonky formula could end up costing you more in interest or lead to a denied loan, the simple answer is no. “Despite the slight differences, major scores are relatively the same,” Gonzalez said.

Just 1% to 3% of consumers surveyed had significant differences between their FICO and VantageScore credit scores, according to a Consumer Financial Protection Bureau study. If you do have a big variation, with a discrepancy of more than 30 points, this could be a cause for concern because it may mean that scorers could be seeing different information on different credit reports.

But before you panic, check the scale being used. If one score is reported on a scale that goes up to 850 and the other on a scale that goes up to 900, your numbers could be off by a wider margin. As long as your score is higher on the scale that goes up to 900, you should be okay.