The Total Amount of Credit Scores You Have Part 2

credit scoresEarlier this week, we published part one of You Have 30 or More Official Credit Scores, which included several options for fee-based services that provide credit scores. In part two, we explore the free options that are available for consumers and when to use them.

Did you know that when you receive your credit score at no cost — whether through your credit card or a free service such as Credit Karma, WalletHub, or NerdWallet — it’s often not a FICO score?

In 2006, the three main credit bureaus, Equifax, Experian, and TransUnion, jointly created a credit scoring model called VantageScore to compete with FICO. When you use a free online service to get your credit score, the score you see is often a VantageScore, not a FICO score.

So what’s the problem with relying on the free sites?

For one thing, a VantageScore is calculated differently than a FICO score. VantageScore 3.0, the latest version of the model, disregards collection accounts that have been paid in full, whereas the FICO models still factor them in.

Also, VantageScore claims that up to 50 percent of lenders use their score, but I don’t know a single one that does. I have nothing against their scoring model, I just don’t see as much adoption of their service as they claim.

Why does this matter? If you apply for a car loan based on seeing a VantageScore of 700 without being aware that their scale goes up to 850, you might feel confident about your credit and the likely monthly cost of the car. However, your lender is likely to be looking at your FICO Auto score of 600, which means you’re going to end up with very different terms than you anticipated!

I see this happen fairly often in my practice, and my clients usually think the better score they saw for free must be wrong. In truth, neither score is wrong — it’s just that each one is calculated using its own algorithms. Remember, the only credit score that matters is the one your lender is using.

So when should you rely on information from companies that provide free credit scores?

While the scoring models used by these companies might not be used by lenders as frequently as FICO scores, their sites offer other great features that can be a useful part of understanding the overall picture of your credit health. Let’s take a look.

Credit Karma, WalletHub, and NerdWallet

Credit Karma, WalletHub, and NerdWallet all give you free credit scores and reports. Credit Karma gives you access to both your TransUnion and Equifax credit reports and VantageScore, while WalletHub and NerdWallet only provide your TransUnion report and VantageScore. You don’t receive access to your Experian report through any of these services, but the odds of something appearing on just Experian, and not the other two, are low, so they can be a great way to regularly monitor what’s on your credit report for free.

These websites will also recommend credit cards and give you a ranking of which you’re likely to qualify for, which can be really helpful if your credit is anything less than terrific, because it could potentially save you from a hard inquiry.

These free services also provide a score analyzer that will tell you what actions will have the most impact on your score. For instance, your credit utilization rate accounts for about one-third of your credit score, so keeping that rate between 10-30% will have a positive effect on your score over time. Remember that having good credit also requires you to use credit and cultivate a positive payment history. Not using any credit at all means your credit score will be in the fair range, at best.

You can also pull all three of your credit reports (once a year, at no charge) at Just be aware that although the service will provide a free and full credit report from each of the three bureaus, it won’t show you any of your credit scores since those vary by the individual scoring model that provides them (FICO, VantageScore 3.0, etc.).


LexisNexis also stores an immense amount of information about consumers and shares it with the credit reporting bureaus. If you’ve been a victim of identity theft, had someone reporting wages with your Social Security number (this happened to me) or have a very common name, it’s probably a good idea to apply for access to your full file disclosure from LexisNexis to make sure the information they have about you is accurate. LexisNexis offers consumers their Full File Disclosure free of charge once per year.

The bottom line: When it comes to financing your life — through credit cards, mortgages, car loans or any other kind of debt – your credit score has a big impact on what kind of terms you can negotiate. Keeping an eye on your credit score is important — if there’s a problem or an error, you want to know and have time to fix it before you apply for a loan. For this kind of monitoring, it’s fine to take advantage of the free tools available, but if you’re going to apply for a big loan, paying for a full credit report that will show you a wide variety of the actual scores lenders use is worth it — especially if you’ve had any credit issues in the past.


You might also like:
How to Boost Your Credit Score
What Goes Into Your Credit Score?
7 Credit Score Myths Debunked

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