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An overview of credit scoring models

An overview of credit scoring models

When you think of your credit score, you are probably thinking about your FICO score. However, while FICO scores may be the most common type of credit score, they are actually not the only type. In fact, you may have almost as many credit scores as you have accounts with various companies! Here's a quick overview of some different credit scores.

FICO Credit Score

FICO maintains several types of scores: generic, bankcard, personal finance, mortgage, installment loan, auto, NextGen and Expansion Score. The only type of FICO score available to individual consumers is the generic score. While the exact formula isn't made public, a general explanation is available at MyFICO.com:

There are three main credit-reporting bureaus: Equifax, Experian, and TransUnion. Each of these agencies maintains slightly different data about individual consumers. While a FICO score can be generated using the data from each agency, that score will be slightly different depending on the data that your creditors report to that bureau. There are no FICO scores generated from information across bureaus.


Lenders use FICO scores to predict consumer behavior based on how they have acted in the past. The results determine whether an individual is offered credit, and on what terms. In 2006, the three credit bureaus introduced the VantageScore to compete with FICO. However, VantageScore remains a very small share of the credit score market. The VantageScore model is also not released to the general public, though the categories and proportions they use are similar to a FICO score:

  • Payment history, 32 percent

  • Credit utilization, 23 percent

  • Credit balances, 15 percent

  • Depth of credit/length of credit history, 13 percent

  • Recent credit, 10 percent

  • Available credit, 7 percent

Other companies, such as Credit Karma and Credit Sesame, use your data to provide you with a credit score estimate. This is not your FICO score, but it can be used to give you a general idea of your score, provided that information matches what is on file at the "big 3" credit bureaus.

Secret credit scores

In addition to FICO and VantageScore, lots of companies you do business with are scoring you in many different categories in a trend referred to as Big Data. There are eight main secret credit scores:

  1. Response score - How likely you are to respond to an offer for credit.

  2. Application score - When you apply for credit, typically the company will ask for additional information not provided by any of the three bureaus. Your application score takes this information into account.

  3. Bankruptcy score - How likely you are to file for bankruptcy.

  4. Revenue score - A company's assessment of whether or not you are a profitable account for them. (Hint: you don't necessarily want to be profitable, as that typically means you are paying too much in interest!)

  5. Attrition-risk or "wandering eye" score - How likely you are to stop using a company's card or account in favor of one of their competitors.

  6. Behavior score - A company's assessment of your behavior only with regard to your account with them (as opposed to a FICO score, which is a numeric reflection of your behavior across companies/accounts).

  7. Transaction score - Every time you swipe your credit card, a transaction score is calculated to determine whether or not to approve the charge (and also to determine whether the person making the purchase is an authorized user).

  8. Collection score - If you are sent to collections, the collections company wants to know how likely you are to to pay them what you owe.

Unfortunately, you can't obtain all of these scores because they are proprietary. That means that the formula used to arrive at the score is the property of the company, and they don't release that information to the general public. On the other hand, your various credit scores are based on your behavior, which you do have the power to change.

Regardless of whether it's FICO, VantageScore, or one of the secret credit scores, the behaviors you should be exhibiting to increase your score include:

  • Paying your bills on time,

  • Using less than 10 percent of your available credit,

  • Keeping accounts open and in good standing for many years,

  • Not applying for lots of new credit at once, and

  • Using different types of credit (i.e., revolving credit such as credit cards as well as installment credit like mortgages and car loans).

Taking the time to fully understand your various credit scores can help you make the best decisions for your financial future.

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