Well I certainly was recently when researching for my score and seeing a significant difference between the 3 bureaus and based on how I received it.
So after searching around, I found a great article which explains the difference and where you can get a true FICO score to get the best idea of where you stand.
Check it out below:
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Saturday, March 26, 2005
Why credit scores don't always add up
By MICHELLE SINGLETARY
SYNDICATED COLUMNIST
Humorist Mason Cooley once said, "Every path to a new understanding begins in confusion."
That quote applies to e-mails I received from confused readers, who recently ordered their credit scores to gain a better understanding of where they stood credit wise.
In one case a husband and wife paid for and got all six of their credit scores (one for each of them from the three major credit bureaus). The scores ranged from a low of 602 to a high of 712.
But when a mortgage bank pulled the credit scores not long after the couple did, their scores were significantly lower, ranging from 598 to 649.
"Why are our scores from the mortgage company different than the ones we pulled online?" the husband asked. "Shouldn't they be the same scores I pull from the three credit bureaus?"
Another reader from Los Angeles wrote that his wife bought her credit score online from TransUnion. The score she received was 864. Three days later, after applying for a home equity loan, the score the lender got from TransUnion was 775.
"That's a drop of over 67 points. It doesn't seem plausible," the reader wrote.
There's nothing amiss here. Here's why.
Most of the credit scores you buy or get free online are not the exact ones used by lenders. The gold standard is what's called a FICO score, named after the San Rafael, Calif.-based Fair Isaac Corp., which devised a mathematical model to predict the credit risk of consumers based on information in their credit report. FICO is the model most widely used by lenders.
It's only been in the last few years that consumers could even buy their credit scores, three-digit numbers that are generated using information from their personal credit files. The higher your score, the better credit risk lenders think you are. A high score often translates into better rates on the money you borrow.
All three major credit bureaus -- Experian, TransUnion and Equifax -- use different scoring models, including FICO, which ranges from 300 to 850. Lenders also use different credit-scoring models, including FICO. Is there no wonder there is confusion?
Several years ago, largely because of pressure from consumer groups and public officials, the bureaus began selling credit scores to consumers. It was long overdue. Now, knowing their scores, people can take steps to improve their credit ranking.
Equifax and Fair Isaac teamed up to provide consumers with their FICO credit scores. The other two credit bureaus, TransUnion and Experian, decided instead to sell to consumers a score that was similar -- but not the real McCoy -- to the FICO score.
"The confusion and irritation of (consumers) is understandable," said Craig Watts, public affairs manager for Fair Isaac. "It could be avoided if Experian, TransUnion and their various consumer Web sites would only be upfront to consumers about the nature of the consumer scores they sell -- they aren't FICO scores, they aren't widely used (if used at all) by lenders. They are at best someone's estimate of what the consumer's true FICO score is."
To be fair, Experian and TransUnion do have disclaimers that inform consumers that the scores they provide aren't FICO scores. But the information is buried in fine print.
When you order your credit score from the three bureaus, here's what you're getting:
# Equifax's credit score is called "Score Power." Even though this uses the FICO scoring mode, you may get a different score than one pulled by a lender because the information in your credit file is constantly changing, which means your score can change as well. The score you get this week may not be the same score a lender would get from the credit reporting company the next. In fact, the last two statements are true for any score you may buy.
# Experian calls its credit score product "PLUS Score" and is based on factors similar to but not the same as FICO. The PLUS Score ranges from 330 to 830.
# TransUnion's credit score product is also not a FICO score, but based on the bureau's own proprietary scoring model, which is why the Los Angeles reader's score was outside the FICO range.
So in addition to scratching your head, you may still be wondering which score to buy.
Well, keep this Cooley quote in mind: "In the theater of confusion, knowing the location of the exits is what counts."
At least you now know why you may have gotten a different score than one shown to you by a lender.
"The key message is that there isn't one credit score, there are a lot of different credit scores," said Heather Greer, a spokesperson for Experian.
I think the key message here is that until there is one uniform credit scoring system, consumers will continue to be confused and probably be forced to buy more than one score from one source to get a rounded picture of their credit standing.
Michelle Singletary welcomes comments and column ideas, though she cannot offer specific personal financial advice. Her e-mail address is singletarym@ washpost.com. Readers can write to her c/o The Washington Post, 1150 15th St., N.W., Washington, D.C. 20071.
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Well there you have it! So make sure you check with FICO and get the monitoring system, since that is where your lender will begin his search. You could even ask your lender which bureau he'll be using to make his determination.
But check regularly because it's your financial future.
Do you have any credit stories, suggestions, solutions to share? Don't forget to add your comment
