Credit Scoring


Why it’s important to know how your credit score is determined. The credit system in the United States is extremely complex.

Not many people know exactly how their credit score is calculated, but it comes down to an algorithm (a complex mathematical formula) that weighs various pieces of data from someone’s credit report and viola you have a credit score.

Just wait, there’s more.

What most people don’t know is that the credit bureaus (Equifax, Transunion, Experian) don’t calculate your score or make the algorithms that generate your scores.

So, Who Makes The Scores?

The most well-known company that makes credit scoring algorithms is FICO (The Fair Isaac Corporation) and they make more the 50 different algorithms! Depending on where you got your credit score from it can one of many companies. For example, Credit Karma uses a VantageScore algorithm, while the mortgage industry uses a FICO score.

Why Does My Score Vary So Much?

When people pull their credit online and then go to a mortgage broker or banker and try to get a loan or line of credit, scores can vary upwards of 100 points or more depending on what algorithm is used to calculate the score; meaning it’s possible to pull a 700-credit score from somewhere on the web (i.e CreditKarma) and then a broker may pull it that same day and get a score in the low 600’s.


Many online companies rely on word of mouth to get business and no one wants to tell their friends about their 520-credit score. To make sure they keep their sales up, many online reporting companies will use the most inflated score algorithms so you’ll tell your friends about your good credit score and hopefully they’ll go check theirs as well.

So how do I find my actual credit score?

There are places that you can pull your credit that use FICO algorithms like the financial industry, however, finding these sites can be tricky. If you would like to know a reputable site, contact us and we are happy to share that with you.  We can also go over what you can do to maximize your score.