Q: What credit score do lenders use? Do they use an average of all my credit scores or use another method
A: The short answer is the Fair Isaac score, usually know as the FICO score is the score most commonly used by lenders such as credit card companies, mortgage lenders, car dealers and owners.
However, the answer is really not as simple as one keynote. In fact, there are almost as many different credit scores as there are lenders. The reason is that most major lenders use custom lending criteria to build your credit score based off the type of loan you are trying to qualify for.
These personalized credit rating criteria are essentially complex calculations that take into account various aspects of your credit history with regard to the type of credit you are trying to get. For example, an auto loan company is very likely to create custom scoring criteria that weighs your story with auto loans more heavily than other items on your credit report. The same goes for credit card companies, mortgage lenders and other financial companies.
Most of the time these custom scoring criteria are based out of the FICO scoring methodology. In some cases, companies can use a methodology based off of one of the main results of the individual credit bureau or as a group called the Vantage score. This score was created by the three credit bureaus to compete with the FICO score, but is much less frequently used in lending decisions.
So your FICO score, you can receive for free when you sign up for a free trial credit monitoring service Equifax, is usually the best indicator of note that the financial lender can use to make credit decisions about your creditworthiness.
The exception is when an individual or a company is trying to use your credit score to determine your overall financial health and character. This can happen when you rent a house or apartment or apply for a new job. In these cases, the person pulling your credit report will probably be more interested in the negative items on your credit report rather than the actual score.
In both cases, it is a good idea to check with the potential lender or creditor to determine what type of credit score, they base their decisions on and get access to this score. You can learn more about services that will provide you access to the credit report and credit score information by visiting our credit report service comparator.