Types of Credit Score
There are five main categories of credit scores, organized by their primary purpose and calculation method.
Main Categories
- FICO Credit Score — a credit score calculated based on payment history, credit utilization, and credit age, with a named example being the FICO score used by American Express to evaluate customer creditworthiness for its Gold Card.
- VantageScore — a credit score developed by the three major credit reporting agencies, Experian, TransUnion, and Equifax, using a combination of credit data and machine learning algorithms, with a named example being the VantageScore used by Bank of America to determine loan eligibility.
- Business Credit Score — a credit score used to evaluate the creditworthiness of businesses, taking into account factors such as payment history, credit utilization, and industry risk, with a named example being the business credit score used by Wells Fargo to evaluate loan applications from small businesses.
- Bankruptcy Risk Score — a credit score used to predict the likelihood of an individual or business filing for bankruptcy, using factors such as debt levels, payment history, and credit utilization, with a named example being the bankruptcy risk score used by the Small Business Administration to evaluate loan applications from entrepreneurs.
- Alternative Credit Score — a credit score that uses non-traditional data, such as rent payments, utility bills, and social media activity, to evaluate an individual's creditworthiness, with a named example being the alternative credit score used by the online lender LendingClub to evaluate loan applications from borrowers with limited credit history.
Comparison Table
| Category | Calculation Method | Primary Purpose | Example User |
|---|---|---|---|
| FICO Credit Score | Payment history, credit utilization, credit age | Evaluate individual creditworthiness | American Express |
| VantageScore | Combination of credit data and machine learning algorithms | Evaluate individual creditworthiness | Bank of America |
| Business Credit Score | Payment history, credit utilization, industry risk | Evaluate business creditworthiness | Wells Fargo |
| Bankruptcy Risk Score | Debt levels, payment history, credit utilization | Predict bankruptcy risk | Small Business Administration |
| Alternative Credit Score | Non-traditional data, such as rent payments and social media activity | Evaluate individual creditworthiness for borrowers with limited credit history | LendingClub |
How They Relate
The categories overlap and feed into each other in several ways. For example, a FICO Credit Score is often used as a starting point for evaluating an individual's creditworthiness, and a Business Credit Score may be used to evaluate the creditworthiness of a business owned by an individual with a strong FICO score. The VantageScore and FICO Credit Score are often confused, as they are both used to evaluate individual creditworthiness, but they use different calculation methods and have different score ranges. The Alternative Credit Score is often used in conjunction with traditional credit scores, such as the FICO Credit Score, to get a more complete picture of an individual's creditworthiness. The Bankruptcy Risk Score is often used by lenders to evaluate the risk of lending to a business or individual, and may be used in conjunction with other credit scores, such as the Business Credit Score, to make lending decisions.