Which Credit Score Matters the Most?

Credit scores can be challenging to navigate.  

Financial jargon can be difficult to understand, but knowing what a credit score is and how they operate is a crucial part of building your financial future. A healthy credit score gives you access to credit cards, mortgages, and auto loans. 

Whether you’re preparing to apply for credit or are well on your way to financial security, knowing the lay of the (financial) land is essential. 

There are three main credit bureaus, Equifax, Experian, and Transunion, each offering its own score. Together, these credit bureaus award a combined VantageScore. 

If none of these names are ringing bells, FICO might. FICO scores are the most popular method for ranking credit.

That’s already a lot of information and weird names to sift through, but don’t worry. We’ll walk you through all of the layers that make up your credit score. 

What are credit scores and why are they so important?

Have you ever lent money to someone, only to have them not return it when they said they would? 

Now, imagine there was a way you could know for sure that they’d pay back on time – you might feel more willing to offer them that loan. 

Credit scores are a way of numerically measuring a person’s likelihood to repay a loan. 

Credit bureaus (also called credit reporting agencies) put together information about people based on their credit and payment histories. Then, they sell that information to credit lenders who use this information, typically summed up as a credit score, to decide if you are a good candidate for a loan.  Credit lenders include credit card companies and banks. 

Confusing, right? 

Think of it like this. Suppose your friend Jim knows Steve. Steve needs some money, so in this case, he’s the borrower. Steve asks you for money, you’re the bank. 

You don’t really know Steve, but Jim does. So you ask Jim what he knows about Steve. Jim is acting as a sort of credit bureau. 

Jim might tell you that Steve works really hard and pays off all of his bills before he spends other places, or that he always pays Jim back when he spots him at the bar. You’d probably feel okay lending Steve some money for gas if he needed it. 

However, if Jim told you that he and some other friends are still waiting for him to give money back to them, you might tell Steve that you will only give him money if he agrees to pay interest after a week. 

Essentially, this is how your credit score works.

Your credit score helps credit lenders figure out how much of a “risk” it is to lend you money. 

A good credit score means that you have the faith of credit lenders, which means they can easily award you loans. It’s also a tool that other companies that you make regular payments to use to decide if you are capable of paying for services. Here are some things a good credit score can help you gain access to:

  • A mortgage on a property
  • Credit cards 
  • Loans 
  • A phone contract
  • To rent an apartment or house

The credit score you have may also affect the interest rate offered to you, or how large your downpayment must be.

What are credit bureaus and how many are there?

Credit Bureaus, otherwise known as credit reporting agencies (CRAs) are companies that collect and maintain data regarding your consumer credit information. 

They pull information about your payments related to timeliness, things sent to collection, etc. Each bureau produces its own credit score. 

Way back when the three big credit unions served different regions of the country. Since, numerous smaller credit agencies have emerged, though the big three are still the main ones most lenders defer to. 

The three names you should know are: 

  • Equifax
  • Experian
  • Transunion

Though these agencies are independent, many of them collect and compile the same information. Even though the information they collect about your credit history might be similar, the math they use is different.

What does that mean for you? 

Well, it means you may have a different score for each bureau. These scores should all be similar, but if you have a wild difference between one score and another, you should consider doing some digging. 

Some credit lenders may prefer to use one bureau over another for your credit information. Usually, one score suffices, however, some larger loans like mortgages use all three bureaus’ reporting. 


Equifax, Experian, and Transunion came together to produce VantageScore.

VantageScore pulls together the information collected by the credit bureaus and gives you a single score. It’s different from a FICO score, which you’ll read about in just a moment. 

The score is comprised of different things, including:

  • Payment history
  • How much of your credit limits you use
  • Your credit history and what it is made up of
  • How much you owe creditors 
  • Recent credit behavior
  • Available credit
  • Unpaid collections

You’ll receive a vantage score once you have one credit account in your credit reporting information.

FICO Scores 

FICO scores are only generated when you have one or more credit accounts that have been open for 6 months, which means that you may have a VantageScore but not a FICO score if you are a new borrower.

A FICO Score is a credit core generated by the Fair Isaac Corporation. It’s a direct competitor to VantageScore, but it reports similarly. 

It still uses your payment history to award you a credit score somewhere in the range of 300 to 850. The higher your score, the less risk you are for credit lenders (ie, the more likely you are to receive a lower interest loan). This is true for all credit scores. 

FICO scores are calculated based on fixed percentages which break down like this: 

  • Amounts you owe make up 30% of the score
  • Your payment history constitutes 35%
  • New credit, and the mix of credit you hold each account for 10%
  • The length of your credit history makes up 15% 

Your FICO score is not impacted by items “reported as child/family support obligations” or your participation in credit counseling. 

In general, your FICO score ignores small collections that are less than $100. 

Which credit score matters the most?

No credit score matters more than another. In fact, it would be wise for you to know all of your major scores. 

Your creditors will select which score report they use, though you may move them in one direction over another if you have a slightly higher score. Even though we’ve seen that these three scores might be slightly different, they should essentially all fall in a similar ballpark. 

Not all bureaus receive the same information, include the same credit reporting in their scores, or update their scores at the same time. 

Checking your score on an annual basis through a free government-approved website helps you keep track of where your score is so that you can be on the lookout for major discrepancies in your scores. 

It is incredibly important that you are cautious about where you receive credit reporting information, as not all services are free or secure. 

Ready to equip yourself to start saving? 

Credit scores can be challenging to navigate at first, but if there’s one thing that takes the difficulty right out of a topic, it’s having the right information at your fingertips. 

If you’re interested in learning more, you can check out the links below for answers to common credit score questions, such as:

And if after reading you’re looking for more info on other financial topics such as saving and investing, SaverLife is the guide you’re looking for. 

As a financial nonprofit we’re dedicated to providing you with the information and support you need to achieve your financial goals. 

For more information or to sign up, reach out to us at SaverLife today!

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