Through December 31, 2023, Experian, TransUnion and Equifax will offer all U.S. consumers free weekly credit reports through AnnualCreditReport.com to help you protect your financial health during the sudden and unprecedented hardship caused by COVID-19.
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Depending on where you do your banking, you may have access to your credit score via your bank or credit union. It's a convenient offer to be sure, but it may cause you to wonder if the score you're seeing is trustworthy enough to base financial decisions on. There are many credit scores on the market, and your financial institution may provide you with any one of them, including one it developed internally.
Although credit scoring models differ, the general process and purpose is the same. The scorer pulls information from your credit report and drops it into a specially created algorithm. The number that comes out will fall somewhere on a spectrum designed to measure and predict credit risk. The higher your score, the less of a risk you're seen to pose—and the better terms you're likely to get when you apply for a loan or credit card. Unless the data on your credit report is wrong or incomplete, the credit score will be accurate. It just may not be the one you're expecting.
Which Credit Scores Do Banks Use?
Many banks provide your FICO® Score☉ , which is commonly used to make lending decisions, but banks can show you whatever credit score they prefer to use. Quite a few versions of the FICO® Score exist. If this is the score your bank provides, it will most likely show you your FICO® Score 8 or 9 because they're used by the widest variety of lenders.
Another commonly used credit score is VantageScore®, which was created cooperatively by the three major credit reporting bureaus (Experian, TransUnion and Equifax). It, too, comes in several versions.
FICO® Scores and VantageScores are just two types of credit scores that can appear on your app, though, so check with your bank to find out which it uses. There are many dozens of credit scoring models, including those used for only for educational purposes. Your bank may opt for any of them, including the one it produces and uses for its lending decisions.
Can I Trust the Score From My Bank?
Any credit score provided on your bank's app or by your request will be a dependable gauge of your creditworthiness, as long as the information on your credit report is accurate.
However, each credit score is calculated in its own unique way. For example, the numerical range for both general-use FICO® Scores and VantageScores 3.0 and newer is 300 to 850, but each model weighs the information found on your credit report differently:
- FICO® calculates all late payments the same way, but VantageScore prioritizes them, with delinquent mortgage payments being the worst.
- VantageScore ranks payment history as 40% of your score, but FICO® Scores counts it as 35%.
- FICO® Scores calculate all credit inquiries of the same type within 45 days as a single credit inquiry; VantageScore counts multiple inquiries, no matter what they're for, within 14 days as one.
Additionally, if your bank provides you with a FICO® Score, it may be based on your credit report from just one credit bureau. The three major credit reporting bureaus may have slightly different information on file about you, which means that your FICO® Scores can vary among them. If one credit report doesn't indicate an account in collections, for example, FICO® Scores created from your credit file with that bureau will be comparatively higher. VantageScores, on the other hand, have a single tri-bureau model, so your scores will be more consistent.
Should I Check My Score Elsewhere Before Taking Out a Loan?
The credit score your bank provides will help you track your personal credit well-being. When it rises, you'll know you're going in the right direction, even if it's not a score that you're familiar with or that a lender typically uses.
Still, since lenders use credit scores to determine qualification and to set terms such as interest rates, it's a good idea to check your credit scores with the most common scoring models to take some of the guesswork out of your planning:
Can I Get My Credit Report Through My Bank?
The credit score that you obtain from your bank's app is just the number that represents the information on your credit report. It won't include your full credit report.
Since the only way to guarantee that your score is accurate is to ensure that what is listed on your credit report is correct, you'll also need to review your credit reports. Checking your credit reports won't affect your credit scores. You can get them from:
- The credit reporting bureaus: You have the right to access your credit reports directly from the credit reporting bureaus. You can access your Experian report for free and view your credit score that's calculated on the FICO® Score 8 model.
- AnnualCreditReport.com: Copies of your credit report from all three bureaus are available for free every 12 months. You can order them online at AnnualCreditReport.com, by phone or by mail.
What Should I Do if I'm Not Happy With Any of My Credit Scores?
In the event that your credit scores aren't where you want them to be, you can bring them up by taking action. Since all credit scoring models use only the information found on a credit report, your strategy will be to ensure the data that's listed there is positive.
- Correct errors. With your credit report in hand, you will be able to see if there are any mistakes, such as accounts that were opened fraudulently. If there are, dispute them. Once they are removed, your scores will likely rise.
- Deal with collections. If you have accounts with collection agencies, your credit scores are being negatively affected. But paying off these accounts may make you look better to lenders, since some newer credit scoring models (such as the FICO® 9 and VantageScore® 3.0 and 4.0) ignore collections that have a zero balance.
- Send payments on time. Across credit scoring models, payment history is almost always the most important factor. So if you've made late payments in the past, reverse the situation and meet all of your due dates from this point forward.
- Reduce revolving debt. Credit card balances that are too close to the limit will increase your credit utilization ratio, which will affect your scores. Focus on debt repayment. A good rule of thumb is to owe less than 30% of your credit line, but the lower, the better.
- Use a variety of credit accounts. If you don't have very many credit accounts, or none at all, it's much harder to prove you're an excellent credit customer. If you have a credit card, try to use it at least to make small purchases you pay off every month. Loans and other types of debt also contribute to your credit score, as long as you're responsibly paying them back.
- Avoid excess applications for new credit. Only apply for the credit products you need and will manage well. Credit applications result in what's called a "hard inquiry" on your credit report, which can cause your score to drop several points. While this may not seem like much, it can be a difference-maker if your score is right on the edge of a higher or lower scoring range.
Viewing your credit score through your bank's app can be a very useful and educational thing to do. Keep in mind, though, that it's not necessarily a number you can show a lender, as it may differ from the scoring system they use to assess your creditworthiness. Since it will rise and fall with your credit activity, be sure to keep an eye on it. You may not have control over which credit score a lender decides to use, it's important to take actions that contribute to your overall credit health.