Credit scores might be the single most common topic when folks ask questions of me. But when you ask me what your credit score is, I can only answer that you’re asking the wrong question. Let’s take a look.
Your Credit Score Depends on Purpose
If I run your credit score for a mortgage application, I’ll get a different score than a car dealer would if you applied for a car loan. A credit card company would get a different score altogether. Why is this? As I’ve covered in another article, your score measures how likely it is that you will default on a specific kind of debt. You may earnestly believe you will never default on any debt, but statistically, you are more likely to default on certain debts than on others, based on how you have handled similar debt in the past.
Deeper Dive: What is a Credit Score?
What or Who is FICO?
FICO is a software company that produces the famous analytic software that helps lenders and other businesses assess credit risk. Originally founded in 1956 as Fair, Isaac and Company, it is now primarily known by its acronym, FICO. All three major credit bureaus (Trans Union, Experian and Equifax) use FICO software, which analyzes and scores your credit based on the history that particular bureau has for you. To complicate the matter further, all three bureaus apply proprietary modifications to the software, too, based on their experience.
Since not all credit history is reported to all three bureaus, each bureau will have a different history and thus produce a different score for you.
Is FICO the Only Game in Town?
No, The three credit bureaus developed another software model called VantageScore. The algorithms work in a similar manner to FICO, but have some subtle differences. The VantageScore model is constantly improving to better predict future borrower behavior based on past history. Vantage scores are usually very close to FICO scores, but rarely exactly the same.
There are other scoring models, but none are currently widely used by the credit bureaus.
Can I Get My Credit Score Online?
Well, you can get a credit score online, but as you know now, you do not have only one score, since it will depend on the purpose of the inquiry, the bureau that produces the score, and the software scoring model.
So what does it mean when you check your score online?
FACO Versus FICO
The companies that offer online scoring do not have access to your specific credit history, unless you give them permission. They almost certainly use VantageScore rather than FICO, and almost certainly the credit history data from only one bureau. Even their VantageScore model isn’t exactly the same as that used by the bureaus for lending purposes to complicate things further.
So how accurate is an online score? It should be close. The most important thing is that your score changes every month anyway. You’ll want to track the general direction of your credit score, and not worry too much about the precise number today. In this case precision is not as useful as accuracy. Are you building better credit or not?
Why Do We Even Have Credit Scores?
Why don’t lenders just look at your credit history and decide whether to lend you money or not? They do look over your history, but human biases and human error often crept into credit decisions in the past. This was particularly true before fair lending practices became law. A score gives lenders a fast, measurable metric that guidelines can be written around. This makes lending decisions more equitable, faster and more reliable.
What’s a good credit score?
The golden question. The answer varies by lender and industry, but if you want to understand where you land, here’s a good place to start:
At a FICO score of 760 or above you will get the best possible pricing on mortgage loans, car loans and credit cards. This brings up an important point. Most of my clients want to get their score higher. Above 800 certainly, since that benchmark is so prized. Only about 12% of Americans have a score above 800. But how much does that benefit them? Well, not much. Beyond 760 you’ll certainly be approved for anything you seek (as long as you have the income to support the payments) and will probably get the best possible pricing and terms.
But those bragging rights feel good, don’t they?
What is a Perfect Credit Score?
All of the major scoring models have possible score ranges from 300 to 850. I’ve never had a client with an 850 credit score, but I know a financial writer who attained it. The highest credit score I’ve ever seen in over 30 years of lending and over a thousand clients was 835. It didn’t help my client get any better of a deal, but she was pretty thrilled to make high score, so there’s that.
How do You Bump Your Credit Score?
We’ll leave a deep discussion about that for another article, but in general:
- Carry at least two open tradelines.
- Take out credit and use it.
- Bank credit cards will give you better scores than store credit cards.
- Pay your bills on time.
- Don’t carry large balances on your credit cards.
- Installment loans, such as car loans and mortgage loans have a more positive impact than credit cards.
Everyone wants great credit, but most folks aren’t willing to do what it takes to get it. You, on the other hand, have made it to the end of this article, so you’ve got this!
Casey Fleming, Mortgage Advisor and Author of The Loan Guide (2014) and Buying and Financing Your New Home (2023) and Insider’s Guide to Reverse Mortgages (2025)
NMLS 344375 / DRE 00889527
About Casey Fleming: Casey Fleming is a veteran mortgage advisor (NMLS 344375, CA DRE 00889527) and Author of The Loan Guide, Buying and Financing Your New Home, and The Ultimate Guide to Reverse Mortgages. He writes extensively about real estate finance, the real estate market, and the relationship between economics and finance. He advises clients throughout California, and is based in the heart of Silicon Valley. He writes articles regularly for several online publications, is a subject-matter expert for two prominent finance-related sites, and is regularly quoted in articles for many other publications.
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Resources used in this article:
Credit Scoring Models – Debt.org
What is a VantageScore Score? – Experian.com