If you have a Discover card, you can access your FICO credit score for free without causing any damage to your credit. Is the FICO score checker on the Discover website accurate, though?
Furthermore, is this the same score that lenders will look at when assessing your creditworthiness?
Let’s take a closer look at what you need to know about the free FICO 8 score you can receive as a Discover cardholder.
A FICO score is a credit score that is used to assess an individual's creditworthiness. FICO stands for Fair Isaac Corporation, which is the company that developed and maintains the scoring model. This type of credit score is widely used by lenders, such as banks, credit card companies, and mortgage lenders, to evaluate how risky it is to lend money to a particular consumer.
The FICO score is based on information in your credit report, which includes details about your credit history, such as:
Your FICO score is a three-digit number that typically ranges from 300 to 850, with higher scores indicating better creditworthiness.
Your FICO score is calculated using a number of different pieces of credit data that are recorded in your credit report.
The factors that contribute to your FICO score are weighted as follows:
A higher FICO score is generally seen as a positive indicator to lenders, as it suggests that you are more likely to repay your debts on time. This can result in better loan terms, lower interest rates, and access to a wider range of financial products and opportunities. On the other hand, a lower FICO score may lead to less favorable lending terms or even difficulty in borrowing money at all.
It's important to regularly monitor your FICO score and credit report to ensure that the information is accurate and up to date, as errors or inaccuracies in your credit report can negatively impact your credit score. You can obtain your FICO score from various credit reporting agencies.
You are entitled to one free credit report from each of the major credit bureaus annually through AnnualCreditReport.com. Until the end of 2023, you can actually get a free credit report from each bureau once a week from the same site.
FICO scores are generally considered to be accurate and reliable indicators of an individual's creditworthiness. At the same time, there are a few essential points to keep in mind when trying to understand the accuracy of your FICO score:
At the end of the day, credit scores are just one of the pieces of information lenders take into account when assessing your creditworthiness. When you apply for a mortgage, for example, they will usually consider factors including employment history, income, and debt-to-income ratio.
If you have a Discover credit card, you can access your FICO score for free through your online account.
It's important to note that consumer scores you receive from a credit card issuer are, ultimately, limited in their usefulness. At the same time, this doesn't mean it can be a valuable tool as you keep your finger on the pulse of your financial health.
Discover provides you with your FICO Score 8. This is one of the most widely used scoring models. In order. to calculate your score, they use data from your TransUnion credit report.
The score provided by Discover is generally considered to be accurate but with some caveats. This is a FICO 8 score calculated based on your TransUnion credit report and using information from one particular moment in time. Other credit scoring models or the same model using your credit report from a different credit bureau could return different results. Similarly, your credit score is dynamic, meaning that it can change quickly based on newly reported information.
When you take a look at your Discover credit score using their free FICO score checker, you are looking at a calculation that is based on your credit history at a specific moment in time. This means that there's a good chance your credit score will vary from month to month.
When you take a look at your score, it's a really good idea to always glance at the "as of" date.
One of the reasons that this type of free credit score service that credit cards so often offer is so valuable is that it won't hurt your credit score.
There are two different ways to check a credit score-- through a hard inquiry and a soft inquiry.
Soft inquiries, on the other hand, can only be viewed by you on your credit report. These don't impact your credit score. When you check your credit score through Discover's FICO score checker tool, it is a soft inquiry and not a hard inquiry into your credit.
There are tons of things you can do to keep an eye on your financial health, one of which is frequently checking your credit score. There are a number of ways you can access your credit score, including some free and some paid methods.
What's important to know is that the credit score you receive in this way isn't necessarily going to be the same score that a lender will look at when you apply for a loan. For this reason, it can be a great way to keep your finger on the pulse of your credit, but it might not be enough if you're thoroughly auditing your financial situation before applying for a mortgage or a loan.
When we talk about credit scores, we usually discuss them as if each individual has one score that's carved in stone. In reality, though, each of us usually has several different credit scores that change over time as our financial circumstances change.
It's common for individuals to have different credit scores because there are multiple credit scoring models and credit bureaus, and each may use slightly different criteria and algorithms to calculate your credit score.
Here are some key reasons why you might have different credit scores:
FICO scores and VantageScores are both credit scoring models used by lenders and creditors to assess an individual's creditworthiness. At the same time, they are not identical processes, and both scoring models can return different results when an individual's credit score is calculated.
Let's take a look at some of the primary differences between these two scoring models.
FICO scores typically range from 300 to 850, with higher scores indicating better creditworthiness. Most lenders use FICO scores, and they are well-recognized and established in the lending industry.
VantageScores, on the other hand, can have different scoring ranges depending on the version being used. VantageScore 3.0 and 4.0 have a range of 300 to 850, similar to FICO. However, VantageScore 1.0 and 2.0 had a range of 501 to 990. This variation can sometimes lead to confusion when interpreting the scores.
Several factors are taken into account when your FICO score is calculated, including payment history, credit utilization, length of credit history, types of credit used, and recent credit inquiries. Payment history and credit utilization are given significant weight in FICO scoring models.
VantageScores also consider payment history, credit utilization, length of credit history, types of credit, and recent inquiries, but some models can weigh certain factors differently. For some versions of the VantageScore, more emphasis is placed on recent credit behavior and trends in your credit history.
How these two models were developed is also an important distinction between them. The Fair Isaac Corporation developed the FICO scoring model in 1989, which was the first broad-based consumer credit score. FICO has been around for several decades, and its scoring models are widely used by lenders across various industries, including mortgages, auto loans, and credit cards.
VantageScore, on the other hand, is much newer. Developed jointly by the three major credit reporting agencies-- Experian, Equifax, and TransUnion-- it was created as a competitor to FICO scores and has undergone several iterations over time.
Lenders typically use FICO scores when evaluating a borrower's creditworthiness. FICO scores are widely recognized and have been in use for many years, making them the preferred choice for most lenders in various industries, including mortgage lending, auto financing, credit cards, and personal loans.
It's important to understand that there are several versions of FICO scores, with FICO Score 8 being one of the most commonly used iterations. However, some industries and lenders may use different versions of FICO scores tailored to their specific needs. For example, mortgage lenders may use FICO Score 2, FICO Score 4, or FICO Score 5 for mortgage lending decisions.
While FICO scores are the primary credit scores used by lenders, some lenders may also consider other credit scores or factors in their decision-making process. For example, they may use their proprietary scoring models or take additional information into account, such as income and employment history.
Mortgage lenders typically look at your FICO scores when assessing your creditworthiness for a home loan. The specific version of the FICO score that they use can vary, but for mortgage lending, lenders commonly rely on older versions of the FICO score, specifically FICO Score 2, FICO Score 4, or FICO Score 5. These versions are designed to evaluate a borrower's credit risk, specifically for mortgage-related decisions.
This means that the score you see when you look at the score provided by Discover– your FICO 8 score– could be quite different from what the mortgage lender looks at.
FICO Score 8 and older FICO scoring models differ in a few key ways, including how they assess and weigh various factors in your credit history.
Here are some of the main differences between FICO Score 8 and its predecessors:
FICO Score 8 is more lenient in how it treats collections accounts. It doesn't penalize you for paid collections accounts, which means that if you've paid off a collection, it won't have as negative an impact on your score as it might with older FICO models.
Some older FICO models penalize your score for collections accounts regardless of whether they've been paid or not.
Authorized user accounts are incorporated into scoring when the FICO 8 model is used. This allows individuals to potentially benefit from the positive payment history of the primary account holder. Some older FICO models don't include authorized user accounts in the credit history used for scoring.
FICO Score 8 may be less punitive when it comes to high credit card balances. While it still considers your credit utilization (the amount of credit you're using relative to your credit limit), it may not penalize you as severely for high balances compared to some older FICO models.
Another important distinction is that FICO Score 8 incorporates updated information about the way that credit reporting agencies handle public records, such as tax liens, evictions, and civil judgments. It no longer factors in certain types of public records that may be less accurate or complete, potentially benefitting some consumers that have negative information on their credit reports.
Older FICO models might have different criteria for public records, which can impact your score.
Before I sign off, let’s look at some of the most common questions about the free score offered by Discover.
When you use the credit score service available through your Discover account, you'll be looking at your FICO Score 8. As one of the most widely used scoring models according to FICO, this can be a great way to gauge your credit health generally.
When you look at your Discover credit score, you're viewing a calculation that was made using data from your TransUnion credit report. It's important to understand that each of your credit reports can sometimes have different information on them, as not all creditors and lenders report to all three bureaus.
In some circumstances, this can mean that your credit scores calculated from different credit bureaus vary quite a bit. For example, if you defaulted on a credit card debt and this was only reported to Experian, your Experian score might be notably lower than those calculated using your Equifax and TransUnion reports.
There are a number of reasons why you might see some variability in your credit scores.
Here are some of the primary explanations for this:
Tools like the one offered by Discover that allow you to check your credit score for free can be very useful as you keep an eye on your financial health. When your credit score indicates to lenders that you are a low-risk borrower, you’ll be much more likely to be approved for credit and loans as well as better able to snag lower rates.
At the same time, the credit score you see when you use this Discover tool is only one of your many potential credit scores. For this reason, it’s important to watch all three of your credit reports for errors, inaccuracies, or trouble spots that need to be addressed.