What’s the Score? A brief guide to credit scores Knowledge Center by: Doug McGregor Mar 17th, 2025 Your credit score is a part of the package of information lenders use to decide whether or not they will lend you money or extend credit. Other factors include things like your employment history and income and their own internal scoring systems. There are two primary credit scoring models you need to know about: FICO® and VantageScore. Each may be used to determine your creditworthiness: that is, how likely you are to repay your loan. Your score can affect the interest rate you pay, the length of your loan, and how much you can borrow. Calculating Scores Both scores use a range of 300-850. A higher score indicates to lenders that you are financially responsible and the risk of lending to you is lower. Influences on your FICO Score: FICO Score Ranges: FICO Fast Facts: Your score isn't influenced by current interest rates on loans you already have. Each time a lender runs your credit, it creates a credit inquiry record on your report. There's a 45-day window for rate shopping before credit inquiries affect your score. Six months of credit history is required to establish a FICO score. There is a separate Auto Score specifically for car loans. Influences on your VantageScore: Vantage Score Ranges: VantageScore Fast Facts: Does not factor in paid-off collections when calculating your score. Late mortgage payments have a greater impact than other late payments. 14-day window for rate shopping before credit is affected. Can produce a score just a month or so after you get your first credit line. What will my lender use? FICO is used by 90% of lenders and has been around since 1989. (VantageScore was first introduced in 2006.) While the FICO Score is currently the 'gold standard' of credit scoring systems, VantageScore is extending its influence throughout the lending industry. Starting in 2025, mortgage lenders will use both VantageScore and FICO when qualifying borrowers for most home loans.* If you’re not sure which scoring model a lender will use, just ask! Quick Credit Tips: Pay on-time, every time. Even if you're only making the bare minimum payment (always good to try and pay more!), meeting your debt payment schedule is key to building good credit. Pay off bills with the highest interest rate first. You'll reduce the amount you pay in interest over time, saving you money in the long run. Or, you can choose to pay off the loan with the smallest balance first. Then, take the amount you were paying each month and add it to the minimum payment on the next debt with the smallest balance. Repeat this process as you go. This is what Dave Ramsey calls the "Debt Snowball" plan. You'll see results quickly! Put "bonus" funds toward paying down debt. That includes a bonus from work, a tax refund, or any other lump-sum payment you receive. (Only do this if you already have an emergency savings fund set aside first!) * Applies to loans backed by Fannie Mae or Freddie Mac. These changes do not apply to government-sponsored loans, including FHA, USDA or VA loans.
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