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Q: What should I check before applying for a credit card? I know about the three credit reporting companies and FICO, but which do I need to check?
A: That’s really up to you. The credit score you obtain from one or all of the three major credit reporting companies—TransUnion, Equifax, and Experian—and your FICO (Fair Isaac Corporation) score are usually going to be fairly close, and that’s because each of the companies as well as FICO use different factors to determine the scores.
FICO uses the information provided and used by TransUnion and Equifax to make a determination of the credit score it will assign to your credit history. Experian, however, relies on their own system, known as “PLUS”. They also have a system known as “ScoreX”.
All three of the companies, however, use VantageScore, which is actually considered a type of score technology that competes with FICO. In addition, TransUnion uses “TransRisk”. “TransRisk” and “ScoreX” are considered by lenders to be “educational” scores; therefore the lenders don’t really take these into consideration when deciding on whether or not to extend credit.
As to what numerical values are assigned to “poor” “average” “pretty good” or “excellent” credit ratings, the numbers again aren’t too different between the three credit reporting companies’ scores and FICO scores. For the three credit reporting agencies, “poor” is considered to be anywhere from as low as 300 to 620. A score of 620 to 640 will be taken by many lenders as “average”; 640 and above are considered “pretty good”.
650 can kind of be considered a class in itself; you can call it “better than pretty good”. From there it goes up to 750, which is considered a median score, and anything between 750 and 800 is considered “excellent”.
FICO scores are basically classed in the same way. Some lenders, however, see 620 or below as being in a “high risk” category.[include file=/wp-content/themes/customtheme/rec-creditscore.php]