Types of Credit Scores
Do you know you have over 56 credit scores with FICO®?
According to Bankrate, Experian and Equifax each provide 16 different FICO® credit scores to lenders alone. On top of that FICO® is just one of the many types of credit scores being used in the marketplace.
So how do you keep track of all the types of credit scores and which ones are most important?
Below we have compiled our top ten types of credit scores business owners like you should know.
Base FICO® Score versions – There are many types of FICO® score versions being used today but they all share a similar groundwork. As you know FICO® has updated its scoring formulas several times throughout the years to keep up with constant changes in the credit landscape. The newest version released is FICO® Score 9. While some lenders adopt new versions fairly quickly, some lenders make take years to upgrade. What’s important is that you check, monitor and optimize your base FICO® Scores prior to applying for funding.
Industry-Specific FICO® Scores – These types of FICO® scores are designed for a certain type of industry such as auto loans (FICO® Auto Score), mortgages or credit cards (FICO® Bankcard Score). While the framework is the same as the base score, there are tweaks based on industry-specific risk patterns. When you order the FICO® Score 1B report you get to see your base FICO® scores plus scores used in mortgage, auto and credit card lending plus the newly released FICO® Score 9.
Vantage Score – This score was developed jointly between Equifax, Transunion & Experian and released in the marketplace in 2006. It’s the FICO® score’s main competitor. Sites such as Credit Karma show your credit scores using Vantage Score 3.0 from Equifax and Transunion absolutely free.
ChexSystems® Consumer Score – The scores generated by ChexSystems® range from 100 to 899, with a higher score meaning you are a lower risk. This reporting agency collects information on closed checking and savings accounts from reporting clients such as banks and credit unions. Financial institutions pull a ChexSystems® report on you when you open a new checking account so they can assess the level of risk you present.
LexisNexis Attract™ Insurance Score – The rating score insurance companies use to calculate insurance premiums is known as the insurance score. The score issued by LexisNexis® ranges from 500-997 with the higher the score the better. An insurance score between 628-775 is considered average while a 776+ is considered a very good rating. You should know your insurance score because it impacts your homeowner’s insurance. You can order your report right on the LexisNexis® website.
Auto Insurance Score – Your auto insurance score is used by auto insurance companies to determine your premiums and rates. It’s not the same as a credit score but the main factors used to calculate your auto insurance score is based on information collected on your credit report and accident and insurance claim history. Each insurance company has its own method for evaluating data. Be sure to check out CreditKarma, you can review your auto insurance score from Transunion at no cost.
Keep in mind there are rules around the use of auto insurance scores. For example, credit-based insurance scores cannot be used to set policy rates in states such as California, Hawaii and Massachusetts. You can always check with your state’s insurance department for regulations around auto insurance scores.
FICO® SBSS Business Scores – FICO® offers various types and versions of business credit scores which take a combination of business and personal credit report data. The small business scores fall within a range of 0-300. The higher the score the more likely you are to repay a loan or line of credit according to terms. Be sure to check out our post on the SBSS business scores where we dive into this score in greater detail.
Paydex® Score – Suppliers, banks, lessors, landlords, and customers use Dun & Bradstreet’s Paydex® Score for various reasons such as credit reviews, determining rates & terms, insurance premiums or deciding whether you’re a stable supplier. D&B requires a minimum of 4 trade lines reporting on your business credit report in order to generate a business credit score. Be sure to review your D&B report and make sure it’s complete and up to date with your company’s most current information.
Intelliscore – Businesses, investors and lenders use Experian’s Intelliscore to evaluate the credit risk of a business. The score ranges from 1-100 with the higher the score the lower the risk class your company falls under. This is an important score to track whether you’re applying for a loan, line of credit or looking to attract investors. First and foremost, check your Experian business credit report and review it for accuracy.
Equifax Business Credit Risk Score™ – Another business credit rating that suppliers, banks, lenders and credit card issuers use to evaluate a company’s creditworthiness is Equifax’s Business Credit Risk Score™. You can order your business report from Equifax on their main site.
Keeping track of these credit scores is essential to the success and financial health of your own business and personal finances. It could mean the difference between getting approved for funding or denied, what types of credit terms and interest rates you’ll pay, insurance premiums quoted, and whether an investor or supplier decides to do business with you.
Until next time…
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About the author
Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, Business.com, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in ‘Fox Small Business’,’American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The New York Times’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’.