Credit Scores: What Banks Use Versus What The Consumer Gets Online

 

 

 

 

 

 

 

I have talked about this many times before.  We as banks use the FICO scoring model where the scores range from 350-850 and we pull from all 3 credit bureaus; TransUnion, Experian, & Equifax.  When you are pulling your credit score online as a consumer most times it is only from one bureau and using the Vantage scoring model that has scores as high as 950.

Here is a look of good information from MyFico.com on “Understanding My FICO Score.”

The article below from the Sun Sentinel talks about this too:

“This study highlights the complexities consumers face in the credit-scoring market,” said Richard Cordray, the agency’s director. “When consumers buy a credit score, they should be aware that a lender may be using a very different score in making a credit decision.”

 There is a lot of additional information available at MyFICO.com and one misconception is that having your credit pulled for a mortgage will drop your score.
Does the formula treat all credit inquiries the same?
No. Research has indicated that the FICO score is more predictive when it treats loans that commonly involve rate-shopping, such as mortgage, auto and student loans, in a different way. For these types of loans, the FICO score ignores inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping. In addition, the score looks on your credit report for rate-shopping inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.
What to know about “rate shopping.”
Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping. In addition, the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.