What Credit Score Model Does Discover Use?

Credit scores numerically represent a consumer’s credit risk, helping financial institutions like Discover assess creditworthiness. These scores help lenders determine an applicant’s likelihood of repaying borrowed funds, influencing decisions on credit card approvals, loan terms, and interest rates. While various scoring models exist, they all aim to summarize a person’s financial behavior into an easily digestible number.

Credit Scoring Models Used by Discover

The landscape of credit scoring models primarily features two major players: FICO Score and VantageScore. FICO Scores are widely used by lenders, with ranges typically falling between 300 and 850. The methodology behind FICO Scores considers various aspects of a consumer’s credit report to predict repayment behavior. VantageScore, another prominent model, also uses a range of 300 to 850 for its 3.0 version and newer. VantageScore models are gaining traction and can score consumers with shorter credit histories.

Discover primarily uses FICO Scores for its lending decisions, such as credit card approvals and credit limit adjustments. This preference is significant because FICO Scores are utilized by approximately 90% of top lenders. Discover also provides a complimentary FICO Score to its cardholders, often a specific version like the FICO Bankcard Score, which is tailored for credit card lending. This means that while Discover relies on FICO, consumers may encounter different scores from other lenders who might use VantageScore or other FICO versions.

Key Factors in Credit Scores

Credit scores, whether FICO or VantageScore, are built upon information derived from an individual’s credit report.

Payment History

Payment history is a primary factor, reflecting a consumer’s track record of making on-time payments. Late payments, especially those 30 days or more past due, can significantly harm a score. Consistent, timely payments are crucial for building and maintaining a strong credit score.

Amounts Owed (Credit Utilization)

Amounts owed, often expressed as credit utilization, also play a significant role. This refers to the percentage of available credit a consumer is currently using. A lower credit utilization ratio, generally below 30%, indicates responsible credit management and can positively impact scores.

Length of Credit History

The length of credit history is another important element, considering the age of the oldest account, the newest account, and the average age of all accounts. A longer credit history, demonstrating a sustained period of responsible credit use, generally contributes to a higher score.

Credit Mix

Credit mix, or the variety of credit accounts held, is also a factor. This includes a combination of revolving credit, like credit cards, and installment credit, such as car loans or mortgages. While this factor has a smaller impact compared to payment history and amounts owed, demonstrating the ability to manage different types of credit responsibly can be beneficial.

New Credit Activity

New credit activity influences scores. This includes recent credit applications, which result in a “hard inquiry” on a credit report and can cause a temporary, small dip in scores. Opening multiple new accounts in a short period can signal higher risk to lenders. However, the impact is usually temporary, and credit scoring models often disregard inquiries after 12 months.

How Discover Provides Your Score

Discover offers its cardholders complimentary access to their FICO Score through its “FICO Scorecard” program. This service allows cardholders to view their score directly via the Discover mobile application, their online account, or on their monthly statements. The score provided is typically updated on a monthly basis, often around the statement closing date, though the exact day can vary for each cardholder.

The FICO Score provided by Discover is generally a specific version, such as FICO Score 8, which is widely used by lenders. This score is pulled from a single credit bureau, often TransUnion, meaning it reflects information from that particular report. This free access is intended for informational purposes, enabling cardholders to monitor their credit health and understand the key factors influencing their score without negatively impacting it. Discover also extends this free FICO Score access to non-cardholders through its website.

Understanding Your Credit Report

Credit scores are direct numerical representations derived from the detailed information contained within credit reports. These reports are compiled and maintained by the three major nationwide credit bureaus: Experian, Equifax, and TransUnion. These private businesses gather data from various creditors, including banks, credit card issuers, and lenders, on consumers’ borrowing and repayment activities.

Regularly reviewing credit reports for accuracy is important, as errors can negatively affect credit scores and potentially hinder access to credit. Federal law provides consumers with the right to obtain one free copy of their credit report from each of the three bureaus every 12 months. These reports can be accessed through AnnualCreditReport.com, which is the official centralized website for this purpose. Checking your own credit report is considered a “soft inquiry” and does not impact your credit score.