How Do Credit Bureaus Calculate Credit Scores?

Credit bureaus collect the personal and financial details that power your credit report. They pull this information from lenders, courts, and public sources.

• Identifying information: name, Social Security number, birth date, current and prior addresses.
• Credit‑account data: account type (credit card, mortgage, auto loan), opening date, credit limit or original loan amount, and current balance.
• Payment history: on‑time payments, dates of late payments, severity of delinquencies, and any charge‑offs.
• Public‑record items: bankruptcies, tax liens, civil judgments, and foreclosures.
• Collection activity: accounts sold to collection agencies, dates and amounts owed.
• Credit inquiries: hard inquiries from lenders and soft inquiries for pre‑approval or personal checks.

Payment history, amounts owed, length of credit history, new credit, and credit mix each move your FICO® Score or VantageScore® up or down according to the weight the model assigns. As explained earlier, the credit bureaus (Equifax, Experian, TransUnion) collect the data that feed these five pillars, and the resulting score reflects how healthy each pillar appears.

• Payment history (≈35% of FICO® Score) - On‑time payments add points; a single 30‑day delinquency can shave 60‑100 points, while chronic late payments may drop 100‑200 points.
• Amounts owed (≈30%) - High credit‑card balances relative to limits raise utilization; staying below 30 % usually protects the score, but a spike to 50 % can cost 20‑40 points.
• Length of credit history (≈15%) - Older accounts increase the average age, boosting the score; closing a decade‑old account may remove years of history and knock 5‑10 points off.
• New credit (≈10%) - Recent hard inquiries and multiple new accounts suggest risk; each inquiry may dip the score 5‑10 points, and several in 12 months can cost 20 + points.
• Credit mix (≈10%) - A blend of installment loans, mortgages, and revolving credit signals diversification; adding a small auto loan can add a few points, while having only credit‑card debt may leave that portion flat.

Next, we compare how FICO® Score and VantageScore® weigh these same factors.

FICO® Score draws directly from the five factors you just saw - payment history (35 %), amounts owed (30 %), length of credit history (15 %), new credit (10 %), and credit mix (10 %). Credit bureaus (Equifax, Experian, TransUnion) calculate it on a 300‑850 scale, usually updating once a month when they receive new report data. Most major lenders still request a FICO® Score because it has been the industry benchmark for decades, so the number you see there largely determines loan approval and interest‑rate tiers.

VantageScore® uses the same data pool but applies a different weighting algorithm and incorporates 'trended' information such as payment patterns over several months. It refreshes daily as soon as any bureau uploads a change, which can make the score look more current. The model is friendlier to thin or newer credit files, often giving a higher number than FICO® in those cases. Because lenders may pull either model, the same credit behavior can produce two distinct scores, which explains why you sometimes see different numbers across applications.

Lenders see different scores for you because each credit bureau - Equifax, Experian, TransUnion stores a distinct snapshot of your credit activity, and the scoring models they use apply those data points in varied ways.

As explained in the 'how each credit factor changes your score' section, the same factor (for example, payment history) may be reported late to one bureau but on time to another, creating divergent inputs for the FICO® Score and VantageScore®.

Beyond the bureau‑specific data, lenders often apply custom versions of FICO® or industry‑specific scores that weight factors such as credit utilization or recent inquiries differently, and they pull the data at different times, so the number they see can fluctuate even on the same day.

Your credit score updates the moment a credit bureau records a new payment or account change and runs the FICO® Score or VantageScore® algorithm. The exact timing hinges on the lender's reporting schedule and each bureau's processing cycle.

1. Lender reports the event - The creditor sends the payment, balance adjustment, or status change to Equifax, Experian, and TransUnion. Most creditors report once a month, typically after the billing cycle closes.
2. Bureau receives the file - Upon receipt, the bureau timestamps the data and queues it for inclusion. Many bureaus post the update to the consumer file on the next business day.
3. File is refreshed - The new information modifies the relevant factor in the consumer file (e.g., payment history 35 %, credit utilization 30 %).
4. Score is recalculated - The scoring engine automatically generates a new FICO® Score or VantageScore® based on the refreshed file; improvements raise the score, negative changes lower it.
5. Score becomes visible - Online monitoring services pull the updated score usually within 24‑48 hours of the bureau's posting, so you may see the change the same day or the following day.

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• Missing a credit‑card payment triggers a negative mark in payment history, the 35 % factor that drives most of a FICO® Score, and the drop appears on Equifax, Experian and TransUnion.
• Raising your credit‑utilization above roughly 30 % inflates the utilization component, pulling down both FICO® and VantageScore® scores within the next reporting cycle.
• Opening multiple new credit cards or loans within weeks generates several hard inquiries and lowers the average age of accounts, shaving points from the new‑credit portion.
• Paying off a long‑standing installment loan reduces your credit‑mix, a factor that can cause a brief dip until the bureaus re‑evaluate the account history.
• Having a civil judgment or tax lien recorded by any bureau adds a severe derogatory item, instantly crushing the scores until the record is removed or corrected.

Credit bureaus (Equifax, Experian, TransUnion) create a file the moment a lender reports any credit activity under your name; without a report, no file exists and you have no score. They compile personal identifiers, account details, payment history, balances, public records and inquiries, then store each piece as a data point that later feeds the FICO® Score and VantageScore® models.

For a newcomer, the first data point usually comes from a secured credit card, a student loan, or a credit‑builder loan that the creditor reports. Becoming an authorized user on a family member's card adds a tradeline without requiring your own borrowing. Some utilities and rent‑payment services now forward payment records to the bureaus, giving you additional positive entries.

After roughly six months of activity and at least one reported account, the bureaus generate a thin file and assign an initial score, which will evolve as more accounts, balances and on‑time payments accumulate. This groundwork sets the stage for the upcoming discussion on how disputing errors can temporarily alter your score.

Disputing an error can cause a short‑term dip or bounce in your FICO® Score and VantageScore® because the credit bureaus (Equifax, Experian, TransUnion) place the item in a 'pending' status while they verify the claim. During this verification window the disputed account may be temporarily excluded from the scoring model, which can shift the weight of payment history (35% of a FICO® Score) or amounts owed (30%), producing a brief score change either up or down.

Once the investigation closes, the item is either corrected, removed, or restored, and the bureaus recalculate the score using the final data. That recalculation often restores the score to its pre‑dispute level, but the temporary shift can appear on your credit report for the 30‑ to 45‑day review period discussed in the earlier 'when your score updates after payments or changes' section. Keep an eye on each bureau's portal to see when the dispute resolves and the score stabilizes.

A credit freeze or fraud alert does not change your FICO® Score or VantageScore® right away.

Both tools tell the credit bureaus - Equifax, Experian, and TransUnion - to limit who can pull your file or to require extra identity verification, but they do not edit the data that scoring models use.

Impact overview

• Direct effect: none. Your payment history, balances, and age of accounts stay unchanged, so the score calculation stays the same.
• Indirect effect: if a freeze blocks you from opening a new credit line, future utilization or credit‑mix ratios may shift, which could move the score later.
• Fraud alert: adds a notice that lenders must verify your identity; it does not appear as a negative item on the report.
• How freezes work: each bureau requires a PIN or password; you can lift or pause the freeze instantly online; the file becomes fully visible again within minutes.
• How fraud alerts work: a 90‑day alert (or 7‑day for active victims) is free; you can upgrade to an extended alert that lasts up to seven years.

Use a credit‑freeze guide from the FTC to set up or lift a freeze quickly.

The bottom line: freezes and fraud alerts protect your identity without hurting your current credit score, though they may influence future score changes if they limit new credit activity.

Identify the credit bureau where your score lags behind the other two, then focus remediation efforts there.

1. Pull all three reports - Equifax, Experian, and TransUnion - using the free weekly service at AnnualCreditReport.com.
2. Compare the three credit scores; the lowest number pinpoints the bureau that needs attention.
3. Scan that bureau's report for negative items (late payments, collections, charge‑offs, or errors).
4. Dispute any inaccuracies directly with the identified bureau via its online dispute portal.
5. Pay or negotiate any outstanding collections that appear only on that bureau's file.
6. Ask the creditor to issue a goodwill adjustment or update the status, but target the creditor that reports to the low‑score bureau.
7. Set up automatic payments for the accounts that feed that bureau to ensure on‑time history builds quickly.
8. Monitor the same bureau weekly; score improvements will appear as updates are processed.

(These steps build on the earlier advice to 'check the bureau your lender or issuer uses' and set the stage for targeted score‑boost strategies in later sections.)

You can rebuild your score after bankruptcy or foreclosure by establishing a pattern of on‑time payments, keeping utilization below 30%, and adding new positive credit accounts. Payment history still drives 35% of the FICO® Score, so each punctual bill chips away at the negative impact recorded by Equifax, Experian, and TransUnion.