How your Credit Score is Calculated

It is very important for you to know how your credit score is calculated. Knowing how credit score is calculated will help you improve your credit score. Let's get started...

FICO Credit Score

Your credit score is calculated by plugging in all the information from your credit report into a special credit risk analysis software. One of these programs was invented by Fair, Isaac and Company (FICO). That's why they call it your FICO score

This credit report software will analyze the information from the credit report and it will generate a Number.

Related: What is considered a good credit score?

This may come as a surprise to you BUT... Your credit score may not be the same in ALL the credit reporting agencies / Credit Bureaus. The reason is simple: Each credit reporting agency may use a different credit scoring software to calculate your credit score.

For example...

TransUnion and Equifax uses scores produced by FICO -- your FICO score)

Experian does not use FICO, they use they own "PLUS" system

All 3 companies also use VantageScore... well they came up with it. See: VantageScore Vs. FICO Credit Score)

So depending on where your credit score comes from, you may find out that your credit score is different.

Since we are discussing credit score, I guess I should tell you why sometimes they refer to your credit score as your FICO score. That's because it's the most popular scoring system out there.

Now you know what FICO stands for and how your credit score is calculated, let me ask you a question:

How is your Credit Score?

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