If you’ve applied for a loan recently, your lender would have pulled your credit report – or even multiple credit reports – to determine your level of creditworthiness. Lenders use any number of credit scoring models to evaluate your credit standing.
Two popular scores are the FICO Score, which was developed by Fair, Isaac and Company, and the PLUS Score which was developed by Experian, a national credit reporting agency. Both of these scoring models use different mathematical calculations to determine your credit score, and a different point scale, so one may be higher or lower than the other. For example, your FICO scores range from 300 to 850 points. But the range of scores for the PLUS scores is between 330 and 830 points.
In most cases, when people talk about your credit score, they are usually talking about your FICO score. If you want to see your FICO scores on your own, even if you’re not applying for a loan, you can get your scores from MyFico. They currently cost $19.95 each, and the price includes a credit report from either Equifax or TransUnion. To get your PLUS score, go to http://creditexpert.com, which is Experian’s consumer website. This score currently costs $14.50, and includes a credit report from Experian.
Regardless of which type of credit score you look at or buy, understanding which type of score a lender is using can be helpful when you are reviewing your credit reports, performing a credit analysis, or applying for a loan.
How the FICO Score Works
There are three primary credit bureaus in the U.S.: Equifax, Experian and TransUnion. When a lender orders your credit report from any of these three national credit reporting agencies, they will receive a FICO Score. The FICO Score is based on several elements of your credit report, including your payment track record, the total amount of debt you owe, the length of your credit history, the amount of new credit you have, and the types of credit used.
FICO scores have different names at each of the major credit bureaus. Equifax calls it the BEACON® Score and TransUnion calls it EMPIRICA®. Experian calls it the Experian/Fair Isaac Risk Model, but uses its own system to determine the PLUS Score (see below).
How the PLUS Score Works
The PLUS Score is a consumer-focused credit score that was created in response to the need for U.S. consumers who wanted more information about their credit standing. By “consumer focused”, I mean that while you can get a PLUS Score, this isn’t the score that lenders use when they pull your credit. Therefore, the PLUS Score is mostly educational in nature. But that’s a good thing for anyone trying to better understand his or her credit standing.
Like most other credit scoring models, the PLUS Score is calculated based on several elements of a consumer’s credit report — factors including payment history, debt usage, inquiries or new applications for credit, and so on. As mentioned, the PLUS Score range runs from 330 to 830. Consumers with a low PLUS Score are considered to be “high risk”, while those with higher scores are considered to be “low risk”.
The PLUS Score is now a part of Experian’s National Score Index which provides data on consumer financial behavior around the country. When you order your credit report from Experian, you will be receiving a PLUS Score.
Determining Creditworthiness Based on Your PLUS or FICO Scores
It’s important to remember that many lenders will look at more than just your FICO Score when making a credit decision. When you are applying for a loan or a new credit card, a creditor or lender may review your work history, income level and other information as well. The FICO Credit Score is just one element of the credit review process, and every lender will use their own system for determining your level of creditworthiness.
As you review your own Experian PLUS Report, which comes with your PLUS Score, the credit bureau will also tell you how your credit compares to other consumers nationwide. Your score will be ranked in a given percentile. For instance, your score may be noted as in the “92nd percentile” the “84th percentile” or the “67th” percentile. This simply means that your score is better than 92%, 84% or 67% of the public, respectively.
Overall, your FICO Score and your Experian PLUS score, along with the credit reports you’ll get from each, will give you important insights into what’s helping – or hurting – your credit rating, and how to improve it.