𝙐𝙉derstanding Credit Scores

Credit Score Origin Story

First of all, credit scores are younger than you may think. They were first introduced at the tail-end of the 80s, right before the boom of Beanie Babies and boy bands.

This first type of credit score debuted in 1989 and is known as the FICO score. While it may sound like the name of a dog, FICO stands for Fair Isaac Corporation. This was the only type of score for almost two decades!

The Two Types of Credit Scores

There are now two types of credit scores used today: FICO and VantageScore. In 2006, the trifecta of credit reporting agencies—TransUnion, Equifax, and Experian—joined forces to create VantageScore. But what’s the difference between the two?

In 2017, VantageScore introduced something called “trended credit data.” This is when a credit score reflects changes in someone’s credit behaviors over time. Credit utilization, which plays a role in trended credit data, is the amount of credit you use with your credit card compared to the amount of total credit available to you. Using data like credit utilization can help someone who has been working to pay off credit card debt over time.

Meanwhile, FICO only takes your most recent credit utilization rate into account. So, someone who has made progress in paying off debt could potentially have a better credit score with VantageScore than FICO.

How to Improve Your Credit Scores

Looking to improve your credit scores? Do these things consistently:

• Always pay your bills on time whenever possible.
• Use 30% or less of the credit available to you.
• Don’t apply for credit cards you don’t need.
• Don’t close older accounts, unless they are charging high fees. If that’s the case, contact the company to see if you can switch to a no-fee card with the same lender.
• Check your credit reports every few months to make sure there are no errors that could be dragging down your scores.

Want to Know More?

SavvyMoney is a tool used for viewing real-time financial data. Easily see your credit scores and learn more about them as they change over time. If you UNbank with Community Choice, SavvyMoney is right there waiting for you in our online banking website and mobile app!

This blog is intended for educational purposes only. For details about specific products or services, see credit union for details. For questions about investments, please consult your financial advisor.