Which Credit Score is the Right One?

Consumers applying for credit are sometimes surprised to find out the credit score they have been tracking is different from the credit score the lenders use to evaluate their loan applications. The truth is, there are many, many different credit scoring models.

A credit score is derived by inputting information from your credit history into a computer program. Three major credit reporting agencies – Equifax, TransUnion, &  Experian – keep track of our credit history. Information on the 3 reports may be the same, but there are instances when a lender does not report to all 3 agencies. So the credit score may vary depending on which agencies’ reports are used.

In addition, different companies have developed different scoring models and different versions of their scoring models. Fair Isaac Corporation developed FICO scoring models. Equifax, TransUnion, & Experian formed a partnership to develop the Vantage scoring models.

FICO and Vantage offer many different versions of their scoring models. The different models are designed for evaluating applications for different types of loans – such as auto loans,  mortgages, or credit cards. Lenders may choose any of those scoring models or develop their own scoring model. Consumers are often provided free access to educational scoring models. The score on these models may not be the same as what the lender chooses to use, but they do provide education about factors that impact your credit score.

Find out more about credit scores, register for the workshop “Credit Impact: Credit Scores & Consumer Loans Workshop” on November 25 from 10:00 am – 12:00 pm at HCC Dale Mabry Campus. Registration and information are at https://credhcc.eventbrite.com