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What is a Credit Score?


As with any type of score, a credit score is a measure of your performance at any given time. In this case, it is a measure of your credit performance. The score can range from 350 to 850, and as the case with most everything except golf, you want the highest possible score. Lenders look to your score to determine the level of risk they will assume by extending you credit and to predict the likelihood of repayment. If you have a low score (350 to 550), lenders may decide you are too big of a risk and deny you credit. A medium score (550 to 700) may be acceptable to lenders, but you can expect to pay higher rates of interest. A high score (700 and above) not only earns you approval with any lender, you will have access to lower interest rates which can save you a lot of money over time.

How is the Score Calculated?

This is one of the big mysteries of credit that will remain a mystery because the method of scoring is a closely guarded secret of the credit bureaus. They use a proprietary algorithm, developed by Fair Isaac & Co. (FICO), to calculate the score based on five different categories of data. Your data is compared with the historical statistical data of broad cross section of borrowers and is scored based on where it falls within the spectrum. Your score is, in essence, a measure of the likelihood that you will pay your debt.

The Five Primary Scoring Categories and Their Impact on Your Credit Score

  1. Payment history (35%): Scores your payment track record with 30, 60, 90+ day late payments detracting from your score.
  2. Debt to credit limit (30%): Scores your debt ratio with ratios over 30% receiving lower scores.
  3. Length of credit history (15%): Scores your credit longevity with longer histories receiving higher scores.
  4. New credit (10%): Scores your propensity to take on new debt with new credit accounts reducing your score
  5. Types of credit (10%): Scores the mix of your credit with certain types of consumer loans or installment accounts detracting from your score.

At one time, all three of the credit bureaus used the FICO scoring method to calculate their scores. More recently, each has developed its own scoring method. Although most lenders still prefer to use the FICO score, the credit bureaus now offer their own as a way to generate income from consumers who want to order their credit reports and view their score. As a result, each of the scores you order from the three credit bureaus will vary widely from each other, and none of them will be similar to your FICO score.

Obviously, this creates a lot of confusion among consumers who rely upon the credit bureaus to keep current on their credit standing. The most important score is still the FICO score because it is the one most often used by lenders to evaluate your credit. The other scores can be useful for tracking your progress on building or repairing your credit, but, before you apply for a loan you should always order your FICO score for a more accurate reading.

The 3 Credit Bureau Credit Scoring Methods

Equifax: Vantage (developed as an alternative scoring method by all three of the credit bureaus)

Trans Union: Vantage

Experian: PLUS (proprietary to Experian and used primarily for educational purposes)

How Can I See My Credit Score?

You can order your credit score from each of the three credit bureaus or from FICO directly. By law, you are allowed to receive one free credit report along with your score from each credit bureau. But remember, although the credit report will contain all the data pertinent to your credit history, the scores will vary. It is recommended that you also order your score directly from FICO, especially if you are considering applying for a loan. Even with the FICO score, you may not see exactly what the lenders see, as the score changes daily.

To order your free credit reports you can go directly to the credit bureaus and order online:

Some banks offer free access to credit scores. Alternatively, you can order your three free credit reports go to or you can also view your credit scores for free at

You can order your score directly from FICO by going to although it is currently charging $19.95.

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This article contains general information only. Sunflower Bank is not, by means of this article, rendering accounting, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, before making any decisions related to these matters, you should consult a qualified professional advisor.