What is a credit score?
A 3-digit number assessing credit risk. The typical scale is 300 - 850. Higher is better, and reaching 660+ will open doors to better products and services.
Based on a snapshot of credit report information at a moment in time. A score can be different today than two weeks ago, and can change next month.
A person doesn't have just one credit score, but too many to count! It's better to focus on using the same actions to increase all scores, than try changing just one score.
Key credit score factors:
On time or late payments for installment and revolving accounts. How late they were and how many are late. Collections and public records.
How much is owed across all accounts and for each account. How many accounts have balances. How much of available credit is being used.
Length of History
Age of credit accounts - oldest, newest, and average age overall. How long since you used each account.
How many recent (hard) inquiries. How many new accounts. How long since recent inquiries and new accounts.
What types of accounts (installment and revolving) you have experience with. How many of each type.
Credit score models:
A credit score model is like a machine that takes in the above credit factors and characteristics, considers their importance, and then gives a score. Different types of businesses like insurance companies and landlords can use a variety of models. A mortgage lender might think installment credit is more important than revolving, and use a model that rewards good payment history on student loans. The 3 credit bureaus each can use different models.
The two main companies that create models are FICO® and VantageScore®. FICO® scores are most commonly used by lenders, while VantageScore® is often informational for customers. FICO® describes their many models as "different versions of computer operating systems or have older or newer generations of smart phones." All the models essentially do the same thing, but each version can have unique and/or updated features.
When comparing credit scores, remember that the score from one source could be different from a second source because they use different models. This is why it's hard to try changing one score, and easier to focus on the main factors that determine credit score across all models.