Why Your Credit Score Is Different Depending On Where You Look

When you check your credit score, you may have wondered WHY your score is different depending on where you check it. Here's why!

These 3 numbers have a impact on your life, from your ability to get a car loan or a mortgage to your chances of being denied an apartment or even a job? This is your credit score.

If you haven’t thought about your score until now, you need to start tracking it. After all, there are plenty of tools (both free and not free) for doing so. 

First, let’s talk about what exactly a credit score is.

Credit bureaus

Since its creation in 1989, the FICO® Score has been the most commonly used assessment of creditworthiness. FICO® Scores are generated by a proprietary scoring algorithm, which empowers lenders to make informed decisions about risk and protects borrowers from unfair bias. This is why FICO® is considered the industry standard.

The base FICO® Score range is 300-850. Higher is better and anything above 600 is generally considered “fair.” Lenders equate your score with the level of risk they’d take by extending credit to you. A higher score means lower risk, better terms and vice versa.

This is why your credit score is so important, not only for credit approval but also for things like your credit limit and the terms of the loan.

The last thing you should know about credit scores is that, while FICO® Scores are used by the majority of lenders, there are also alternatives to the FICO score.

For example, some companies base its credit scores on the VantageScore model. Whichever model you or your lenders use, your credit score is actually three different scores, each based on your credit reports from the three bureaus (Equifax, TransUnion, and Experian).

As mentioned above, your credit score may vary slightly depending on the credit agency it comes from and the scoring algorithm used.

When you apply for credit, a lender may use a specific score (such as FICO) or an average of your various scores (FICO & Vantage).

So, focus on what you can control: Factors such as your length of credit and payment history and your credit utilization. If a crisis causes your score to go down, you can rebuild it in the same way you would originally create and maintain good standing.

According to some, your FICO summarizes your credit history…based on your financial decisions.  As mentioned above, that history is reflected on your three credit reports.

Here are the most common factors used in credit score algorithms:

This is when you apply for a credit card or other type of loan and the lender pulls your credit report as part of the decision-making process. A hard inquiry usually lowers your score, so the more inquiries you have, the bigger the impact.

They also remain on credit reports for about two years, so be mindful and strategic when you need to apply for new credit accounts.

It’s good to have at least a few accounts (but not too many) and variety of account types is also important. Lenders want to see that you’ve used different types of credit without problems. 

Also known as your balance-to-limit ratio, this is simply the percentage of your total credit limit in use at any given time. 30% or below is the target.

Higher percentages signal to lenders that you’re having trouble paying off your cards or spending more than you make, both show potential risks.

These consist of a range of “red flags” from late bill payments to credit accounts in collection and bankruptcy filings. These blemishes can stay on your report for up to a decade, so try to avoid those at all costs.

One easy way to avoid late payments is to sign up for autopay on all of your accounts, from utilities to credit cards.

Paying your bills on time is one of the most important ways to build and maintain a good credit score. This isn’t limited to debt payments either. Late payments to a utility or cell phone account can also lower your score.

After reading this article, you’re probably curious about your own scores and credit history. Here’s where you can find them:

Federal law entitles you to a free annual report from each of the three major reporting agencies. However, this doesn’t include a free credit score.

To obtain your score from TransUnion, Experian, or Equifax, you have to sign up for one of their monthly subscription plans. These range in price from $16.95-$24.95/month. 

It is a good idea to get an idea of your credit scores and what is on your credit report so when the time arises to apply for something you aren't shocked at the score you see.

We can help if you are planning to buy a home in the future, let's get you a mortgage credit report, and a mortgage plan in place.

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Why Does My Online Credit Score Differ From My Mortgage Lender Credit Score?

Lenders use different credit scoring models to gauge your risk as a borrower. Each lender chooses the one that best suits its needs, and some use scores that are weighted according to their industry. For example, a mortgage lender might use a different scoring model than an auto lender. Other lenders use a blend of the scores that are assigned to you by the three credit reporting agencies (CRAs)...

A credit score calculates your risk level for a lender based on your past performance managing debt. What many consumers do not realize is that they have more than one credit score. Numerous formulas exist for calculating credit scores, and each bureau does so a different way. Because no two formulas are the same, your credit scores will differ depending on the type of credit score you pull. In addition, you have a separate credit score with each of the three credit bureaus. If you pull a different type of credit score than your lender pulls, your numbers and your lender's numbers won't be the same.

The majority of mortgage lenders utilize FICO scoring. FICO scores are based on a proprietary formula owned by the Fair Isaac Corp. When a lender requests your FICO scores, it receives a tthree bureau report that contains your FICO score from each credit bureau. Unfortunately, consumers don't have access to all three of their FICO scores. You can purchase your TransUnion and Equifax FICO scores directly through the Fair Isaac Corp.'s website, myfico.com. You cannot, however, purchase your Experian FICO score. Experian releases FICO scores to lenders, but not to consumers.

Most individuals who decide to pull their credit scores online visit what they believe is the most reliable source for the information – the credit bureaus. The credit bureaus, however, sell you their own proprietary score known as a “Vantage Score.”  FICO scores ranges from 300 to 850, Vantage Scores ranges from 501 to 990. Due to its higher range, your Vantage Score will always be higher than your true FICO score. This can lead to disappointment when you visit a lender armed with what you believe is an excellent credit score only to be told that you aren't as qualified as you thought you were. The only way to ensure that the scores you are purchasing are legitimate FICO scores is to buy them directly from the Fair Isaac Corp.

Your FICO score is calculated using the information that appears on your credit report with each credit bureau. You don't have to pay to review the information for accuracy. The Fair Credit Reporting Act gives you the right to pull a free credit report from each credit bureau once each year at  www.annualcreditreport.com. It does not, however, give you the right to free FICO scores each year. Advertisements for free credit scores generally require you to sign up for an annual service or don't offer you your actual FICO scores. The bad news is that if you want real FICO scores, you'll have to pay for them. The good news, however, is that with your real FICO scores in hand, you can rest assured that your scores will match your lender's.

Need more information? Need to check your credit report?

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