Different Types of Credit Scores & Why They Matter

A credit score is a number that reflects your financial trustworthiness. In the U.S., scores usually range from 300 to 850. Lenders use this number to decide how risky it might be to lend you money. Your score depends on factors like payment history, utilization, and credit mix, but it can also shift depending on the different types of credit being considered. Mortgages, car loans, and credit cards may each rely on different scoring models based on the type of credit involved.

FICO Scores: The Industry Standard

FICO scores, created by the Fair Isaac Corporation, are the most widely used by lenders. These scores come in different versions, such as FICO Score 8 or FICO Score 9, which are used for general lending. There are also industry-specific models like FICO Auto Score and FICO Bankcard Score.

FICO scores are based on five factors:

• Payment history (35%)
• Amounts owed (30%)
• Length of credit history (15%)
• New credit (10%)
• Credit mix (10%)

VantageScore: A Growing Alternative

VantageScore was developed by Experian, Equifax, and TransUnion as an alternative to FICO. It uses the same 300–850 range but has different scoring rules. For example, VantageScore can generate a score with just one month of credit history, which makes it more accessible to people who are just starting out.

Its latest model, VantageScore 4.0, also uses trended data. This means it looks at your behavior over time, like whether you’re steadily paying down balances, rather than relying on a single moment.

Industry-Specific Scores

Beyond FICO and VantageScore, lenders sometimes use specialized models tailored to different types of credit. For example, auto lenders may focus more on your car loan payment history, while mortgage lenders emphasize your housing payment habits. Knowing how these different types of credit affect scoring can help you prepare more effectively before applying.

In addition, some companies use alternative scoring models that include non-traditional data, like rent, phone, and utility payments. These types of models are especially helpful for people with thin or no credit files.

Credit Score Ranges and Their Meanings

Understanding where your score falls within the credit score range can help you gauge your credit health. For FICO scores: ​Experian Credit Report

• 300–579: Poor
• 580–669: Fair
• 670–739: Good
• 740–799: Very Good
• 800–850: Exceptional​

For VantageScore:​

• 300–499: Very Poor
• 500–600: Poor
• 601–660: Fair
• 661–780: Good
• 781–850: Excellent​

Lenders use these ranges to decide your eligibility and loan terms. Higher scores often come with better interest rates and more favorable approvals.

Why Your Credit Score Matters

Your credit score impacts more than loans. It can affect your ability to rent a home, the interest rates you receive, and even job opportunities in some fields. A higher score opens up better financial options. A lower score can limit access and increase costs.

Recent Trends in Credit Scoring

Credit scoring is evolving to be more inclusive. In 2024, the Federal Housing Finance Agency required lenders to use both FICO Score 10 T and VantageScore 4.0 for mortgages backed by Fannie Mae and Freddie Mac. These models use trended data to reflect your borrowing habits over time, not just a snapshot.

There’s also growing interest in alternative data. Paying your rent or phone bill on time can now help build your credit in some models. That’s especially useful for people new to credit or rebuilding after setbacks.

This shift supports tools like Cheers Credit Builder, which helps you build credit while saving. Cheers offers flexible plans ranging from $600 to $3,600, with terms from 12 to 24 months. You can start building credit with monthly deposits as low as $25. Each on-time payment is reported to all three major credit bureaus—Equifax, Experian, and TransUnion—helping you strengthen your credit profile while growing your savings. At the end of your plan, you’ll get back most of what you’ve paid, minus a small interest charge.

Cheers doesn’t require a credit check, just identity verification, so there’s no hard pull. Your payments go into an FDIC-insured account, and when the term ends, you get your savings back, minus interest. It’s a simple, low-risk way to build credit and establish a positive payment history.

Understanding credit scores—and how to manage them—is key to financial flexibility. Since different types of credit are evaluated differently, it’s important to know which model applies to your situation. With tools like Cheers Credit Builder, you can build credit history across the board while saving toward your goals.

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References:

• Fico: https://www.myfico.com/

• Consumer Financial Protection Buerau: https://www.consumerfinance.gov/

• EQUIFAX: https://www.equifax.com/
  

• America’s Debt Help Organization: https://www.debt.org/
  

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