Kinds of Credit Scores:

A Look at the Three Major Credit Agencies

In this day and age, you likely can barely make it through the day without being bombarded with information about credit histories, credit scores and a credit report. With all of that said, you may not really know too terribly much about everything that is associated with credit histories, credit scores and a credit report. With this in mind, this article has been prepared to present you with some basic information about the three basic kinds of credit scores that are in use today, the three credit scores that are available from the three major credit agencies that are in operation today.

The Three Major Credit Reporting Agencies

The three major credit agencies that are in operation today are Experian, Trans Union and Equifax. All of three of these agencies are widely used when it comes to creditors desiring to obtain financial background information including credit histories, credit scores and credit reports from individuals seeking a loan or financing of one type of another.

Before you do apply for a loan or any other type of significant financing, it is important to make certain that your credit reports are in order and contain accurate information. Therefore, it really is important for you to have at least a basic understanding and knowledge of these three credit reporting agencies.

The FICO Score

The three major credit reporting agencies invented the FICO scoring method in the 1980s with help from Fair Issac and Company. The FICO credit scoring system uses a numerical grading scale to provide a succinct evaluation of a person’s credit history. The credit score or FICO score will fall somewhere on a range of 300 and 850. The FICO credit score regimen takes into account such factors as payment history, current unpaid debt, how long you have had credit, number of credit inquiries, and types of credit you’ve had.

Each of the three major credit reporting agencies use the FICO scoring system in a slightly different manner. The variation are not particularly grandiose. However, the variations can and in many cases do result in a variation in a person’s credit score from one agency to another.

A New Alternative to the FICO Score

More recently, new system of tracking a person‘s credit history has been in development and is now in somewhat limited use. The new system of tracking a person‘s credit history is called VantageScore. The three major credit bureaus have been involved in the development of this new system -- and are likely to make significant use of the news system into the future.

The new system does rely on numerical data to develop a credit rating for a consumer. The scores go from 501 to 990. However, under this new system, the raw numerical is transformed into a letter grade -- precisely like the letter grades used in an academic setting. Consumers, under the VantageScore protocol, will be given a letter grade in regard to their credit histories of A, B, C, D, or F.