What is a Credit Score?
Your credit score is an important number that lenders use to determine how much risk they would be taking on by giving you a loan. This helps them understand your financial situation and whether or not they should lend money towards any financing for things like car loans or mortgages.
Credit scores are determined by your entire credit history, though some things will stay on your credit for a certain period of time such as a bankruptcy.
Types of Credit Scoring Models
There are three main credit reporting bureaus:
- Experian
- TransUnion
- Equifax
Which provide data for the two main scoring models:
- FICO (Fair Issac Corporation)
- VantageScore.
Other scoring models do exist, but typically are only used in specific situations. For vehicle financing, lenders will typically use a FICO Auto Score, which is a FICO model with emphasis on previous auto loans.
FICO Credit Scores
FICO is the most commonly scoring model for financing approvals. Like the FICO Auto Score, there are industry-specific FICO models that are used depending on the type of financing being applying for.
FICO Score Range: 300 – 850
FICO Key Factors:
- Payment History
- Total Debt
- Length of Credit History
VantageScore Credit Scores
A competitor to the FICO score, VantageScore was created by the three credit reporting bureaus themselves.
In earlier models (VantageScore 1.0 and 2.0), the models used a different score range from 501 to 990. Starting with VantageScore 3.0 and carried into 4.0, they’ve aligned the score range with the FICO scoring model.
VantageScores can be more flexible than FICO and can be adjusted to weight certain debt types more heavily than others.
While this is a common credit scoring model, it’s not frequently used for car loan approvals.
VantageScore Range: 300 – 850
VantageScore Key Factors:
- Payment History
- Age & Type of Credit
- Debt to Credit Ratio
Credit Score Ranges
300 to 850 is the standard credit score range, as seen in both the FICO and VantageScore models.
We often hear terms like “poor”, “fair”, “good”, or “excellent” when it comes to credit. But how do those labels translate to the credit score numbers?
Credit Score Range Breakdowns
FICO
- Exceptional: 800 – 850
- Very Good: 740 – 799
- Good: 670 – 739
- Fair: 580 – 669
- Poor: 300 – 580
VantageScore
- Excellent: 781 – 850
- Good: 661 – 780
- Fair: 601 – 660
- Poor: 500 – 600
- Very Poor: 300 – 499