[Y]ou may hear a lot about a FICO score and how important it is to have a good one. The FICO score is a model that was developed by the Fair Isaac Corporation to determine how much of a credit risk each person is.
What you may not understand is that there are numerous FICO scores. In fact, it is estimated that there are around 50 different scores. That sounds like a lot to keep track of and maybe even unnecessary.
Only One for You
You will only see one FICO score if you pay for your score. The others are designed for different people based on why you have applied to them for credit or a loan. Each score uses a little different calculation based on the information that is important to the person receiving the score.
The score you receive will not be an average of all of them, but it will give you an idea of what others will see. Keep in mind that if you are on the border between fair and good credit or fair and bad credit, the number a lender sees might be below that threshold or above by a few points.
Does It Matter?
You may wonder if all of those FICO scores even matter. The answer is both yes and no. You should not focus specifically on one number, but on improving your overall credit history by making payments on time and keeping credit card balances low.
You won’t know what score a lender will see until after you apply and you have no way of knowing exactly what information goes into their score. However, you should be aware that the lender may see a different score from what you see. If you are concerned that you are near the border of being accepted, you may want to address any issues upfront. Remember that while a lender looks at your score, he or she will also view what is in your credit report. By offering an explanation for any negative information, you may have a better chance of being approved.
The other scenario is to wait until your score improves more to apply and have a better chance of being approved.