Credit Score

A credit score is a number calculated from the information in a consumer's credit report. It is not stored in the credit report itself; rather, it is produced by a scoring model that analyzes credit report data at a specific point in time. There is no single credit score. Different lenders may use different scoring models, such as those developed by FICO or VantageScore, and the three national credit reporting companies (Equifax, Experian, and TransUnion) may each produce scores based on the data they hold. Because creditors do not always report to all three companies, scores can vary depending on which credit report is used. Scoring models generally consider several categories of information. Payment history is often the most heavily weighted factor, reflecting whether payments have been made on time. Amounts owed, such as credit card balances and loan balances, are also considered. The length of credit history, the mix of credit types, and recent credit inquiries or new accounts can also affect a score. The exact formulas are proprietary and can differ between models. Credit scores are used by lenders, landlords, insurance companies, and others to assess risk when evaluating applications for credit, housing, or services. Consumers can review their credit reports from each of the three national credit reporting companies for free at AnnualCreditReport.com, the website authorized by federal law for that purpose. Credit scores are not included in the free annual credit reports, but they may be available from other sources, sometimes for a fee or as part of a financial monitoring service. The Fair Credit Reporting Act (FCRA) is a federal law that governs how credit reporting companies collect and share information. The Consumer Financial Protection Bureau (CFPB) provides educational resources about credit reports and scores. A credit score is a risk-assessment tool, not a measure of personal worth or financial success. Scores change as the information in a credit report changes, such as when accounts are paid down, new accounts are opened, or time passes. A score that is high for one type of loan may not be the same score used for another, because lenders may use different models or versions. Understanding how scores are calculated and reported can help consumers interpret the information in their credit files. For specific questions about credit reporting, the CFPB and the Federal Trade Commission offer consumer guidance.

A lender may request a credit score from a scoring model when a consumer applies for a mortgage, and the score helps the lender evaluate the risk of extending credit.