Credit bureaus vs. credit scoring models

man using laptop computer, sitting in kitchen

A credit bureau, also known as a credit reporting agency, collects credit information, turns it into a credit report and keeps track of your credit history.

There are three credit bureaus: Equifax, Experian and TransUnion. A credit scoring model assigns a number to your financial outlook. There are many models; the two best known are FICO Score^® and VantageScore^®.

Lenders use credit reports and credit scores to help them determine your creditworthiness, so you can better understand your own credit situation.

FICO

Released in 1989 by the Fair Isaac Corporation

300 – 850

Uses statistical scoring analysis that tries to predict your creditworthiness based on your your past credit behavior. Builds your score using three sub-models – one for each credit bureau.

Drills deeper into financial data and helps lenders predict how you will do with specific types of loans, such as a mortgage or auto loan or credit cards.

VantageScore

Created in 2006 by Experian, Equifax and TransUnion

300 – 850 Includes letter grades A – F for easier interpretation

Applies a statistical scoring analysis that tries to predict the likelihood you’ll pay back a loan. Also considers consumers with a credit history shorter than 6 months. Creates a single tri-bureau model using details from all bureaus.

Overlooks collection activity of less than $250 and takes into consideration accounts negatively affected by natural disasters.

Even though both credit models use the same information, they weigh each factor differently, resulting in your credit score varying somewhat from one to the other.

At LGFCU, we use credit scores to determine the documentation needed during the loan application process.

That means all approved applicants get the same great rate! When members apply for a mortgage or other loan, LGFCU uses FICO^® 8 to determine eligibility.