Credit scores are some of the most important financial numbers you have, but it is common for people to not know much about them. Do you know you have more than one credit score? Some lenders use one score, while others use another. Let's look at what these scores are and what they mean.

What Is a Credit Score?

The term credit score refers to a numerical representation of your credit history. Lenders report your credit use to credit bureaus. Those bureaus create an extensive file on you that documents all of your use of credit over time. Then, other organizations take that information and produce a number from it. Numbers typically range from 300 to 850, and the higher your score is, the better you have managed your use of credit in the past.

FICO Credit Scores

FICO is the most recognized credit scoring tool used today. It comes from the Fair Isaac Corp, which introduced this score in 1989, though it has changed many times since then. FICO is a specific brand of credit score. Many credit card companies and car lenders use FICO scores to decide on lending to consumers, and FICO scores are heavily used in the mortgage industry.

You may have a good FICO score if your score is about 690. However, each lender determines what they believe is necessary to lend to or how much to charge.

FICO scores are significant because they provide insight into how you've used credit in the past. Most lenders believe that past credit usage indicates how you will manage the credit they extend.

Other Credit Scores

As noted, there are several other types of credit scores. They are different brands issued by various companies and organizations, and here's a look at some of them.

VantageScore

The VantageScore is the second most common brand of credit score. It was first introduced in 2006 by the three credit bureaus and is considered a good tool for consumers and lenders. This credit scoring model incorporates the same types of information that FICO does but may put more value on one area than another.

FICO scores typically require a person to have at least one account opened and reported to a credit bureau for at least six months before a score is generated. VantageScore can do the same within just one month of history.

Many lending institutions use VantageScores, and the factors contributing to these scores are relatively the same as FICO.

CreditXpert

You may hear a bit about CreditXpert, a predictive credit scoring tool that provides mortgage lenders with financial information about borrowers' qualifications. This credit score focuses more on determining whether a borrower will likely pay their mortgage payments on time.

CE Score

Yet another version is a CE score, which has a higher minimum credit score of 350. This credit score puts less of a positive spin on payment history. For example, with FICO, your payment history accounts for as much as 35% of your credit score, and with CE Score, that's just 20%. Credit history is also less important, accounting for just 5% of your score compared to 15% of your FICO score.

CE Score is based on data from just Experian, one of the three credit bureaus. Currently, CE Score is not widely used by lenders and does not share as much information as other credit reporting tools.

Experian Credit Score

The Experian credit score is focused on the data reported to Experian rather than any other credit bureau. Remember that each credit bureau collects different data, and some lenders may not report to all of them. That's why the data from this credit report could be different than others.

Pros and Cons of FICO and Other Credit Scores

When using any credit score, the goal is the same. Show lenders that you can make payments on your debt on time every time. Yet, there are a few differences in these credit scores to consider.

• FICO is heavily used in the US by many lenders, including mortgage, car loan, and credit card lenders. It is one of the most reported numbers, meaning you should focus your time here.
• You may benefit from your CE Score over others if you don't have a long credit history. However, remember that you do not get to pick and choose which score your lenders use. They do.
• There are different versions of each of your credit scores. For example, FICO Scores 9 and 10 are the newest versions and differ slightly in their algorithm. VantageScore has been updated over time, too.

If you're unsure which credit score a lender will use, ask them. It's often provided in terms and conditions during the application process. This way, you know what data they use to decide on your application.

The goal is the same, though. As long as you consistently make payments on time, you will see your credit score rise over time, and that's what lenders want before they lend to you.