What You Need to Know About Credit Score Variables

Have you ever checked your credit score online only to see a different number when pulled by a lender? That’s because lenders pull information from various credit bureaus and utilize different credit scoring models, each with different weighted metrics used to calculate your score. On top of that, each online credit monitor, lender, and financial institution looks at these inputs differently.
Yes, there is a lot behind a credit score, but it is worth reading on to unpack what it all means to you and your financial planning.
The Bureaus
There are three major credit reporting agencies: Equifax, Experian, and TransUnion. When a lender checks your credit, they are likely pulling from one of these big three. All three agencies gather information from financial institutions and lenders to populate consumer credit reports. Your credit score is calculated from the information on your credit report.
FICO Score
Fair Isaac Corporation (FICO) has developed some of the most widely used credit scoring models. Your FICO score is calculated based on different weights for payment history, credit card balances, credit age, account mix, and inquiries. As financial trends change, FICO develops new models to work better for consumers.
Online Credit Monitors
A good, free way to keep track of your score is using online credit monitors. While these services give a good general direction, they typically use different metrics than lenders to calculate your credit score. For instance, BHFCU’s free credit monitoring tool uses VantageScore 3.0 (as do many other online services), whereas over 90% of lenders (including BHFCU) use a FICO model. This difference will likely make your score vary between the two.
Financial Institutions & Lenders
When you’re ready to apply for a loan through BHFCU or any reputable lender, they will do a hard pull of your credit score. The lender will land on your score by pulling from their subscribed bureaus and scoring models. Because the weights of credit reporting metrics vary across models and bureaus, the credit score they give you could look a little different than what you have seen online.
What it Means to You
Your credit score is ever-changing over time. While all of the above is going on in the background, it’s your job to focus on what you can affect. Take a look at our recent blog outlining four keys to increasing your credit score.