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Discover offers consumers a Credit Scorecard, which is a free service that includes a FICO score. Discover and a majority of other lenders use FICO scores in lending decisions. And as a consumer, it’s understandable to want to see the same information that lenders see when checking your credit.
However, there are different types of credit scores and many factors that influence those numbers. And if a consumer sees a discrepancy between a FICO Score provided by Discover and a FICO score offered by another agency or monitoring service, they might question the Discover FICO score accuracy.
Is the Discover FICO Score Accurate?
First off, the Discover FICO Score provided to consumers is accurate – as long as all of the information in the credit report is accurate. What consumers should know, however, is that this score might not be what other lenders use. Specifically, Discover’s Credit Scorecard uses a FICO Score 8.
What is FICO Score 8?
The FICO Score 8 model was a new version of the FICO score that was introduced in 2009 as a way to better predict the likelihood of consumers repaying their bills.
Some elements of FICO Score 8 are the same as older FICO models. For example, scores range from 300 to 850. The categories and weighting factors still break down in the same way as well. For example, to calculate a FICO Score 8, 35 percent of the score is based on payment history, and 30 percent is based on amounts owed. Meanwhile, 15 percent of a score is based on the length of credit history, 10 percent is recent applications, and 10 percent is reliant on having a good mix of types of credit.
But FICO Score 8 differs from previous versions in that it ignores debt collection items with an original amount under $100. It also is more forgiving when it comes to an isolated late payment. However, it is more sensitive to high credit card utilization.
Why Your FICO Score Looks Different Compared to Other Scores
Consumers have a FICO Score for each of the three major credit reporting agencies, which are Equifax, TransUnion, and Experian. FICO scores can be different at each credit reporting agency because they’re based on the information that specific agency has on file. Credit reporting agencies can and do maintain different information about consumers.
In addition to there being dozens of credit scoring models, a single score can vary from month to month, or even throughout the month.
Also, the credit scores seen on many free sites are known as “educational scores.” This means they aren’t based on FICO scores. And while educational scores can give you a general overview of your credit, they’re likely not what lenders are looking at.
Which Credit Score Do Lenders Use?
FICO scores are used in more than 90 percent of lending decisions in the U.S. Before the development of the FICO score, lenders used their own scoring methods to determine the level of risk with borrowers. However, there were many discrepancies in these scores. FICO scores were then developed, but there are now 28 different FICO scores available. Each of these is optimized for different scenarios, including credit card, mortgage, and auto loan lending decisions.
Along with FICO scores, there is also the Vantage Score. This was developed by the three major credit reporting agencies, and the latest version of this specific model is VantageScore 4.0.
What is a Good Credit Score?
Every lender has its own set of standards when it comes to assessing borrower risk. However, there are some general guidelines for determining a good credit score. For FICO score models that range from 300 to 850, lenders generally consider scores of 670 to 739 to be good, 740 to 799 to be very good, and above 800 to be excellent.
What about the not-so-good scores? Lenders generally consider scores of 300 to 579 to be very poor, and 580 to 669 to be fair.
VantageScores have a slightly different breakdown of good versus bad credit. Anything from 300 to 549 is considered very poor on this model. 550 to 649 is poor, 650 to 699 is fair, and 700 to 749 is good. On the VantageScore model, 750 to 850 is considered excellent.
To sum it up, Discover’s Credit Scorecard uses a FICO score. Even more specifically, it uses the updated FICO Score 8 model, which isn’t as widely used as some other FICO models. And in fact, even Discover notes in the fine print that it may use different scores and other information in its lending decisions.
But it’s not uncommon for there to be slight – or even big – differences among credit scores. The best you can do is work to build and maintain good credit over time so it’s there for you when you need it.
Author: Jeff Gitlen