Different websites provide very different credit scores
Dear Credit Score Report,
Why do I get extremely different scores on the same day,
with the same reporting agency (Experian), but different websites? On July 22,
2010, I checked my credit score on two websites. FreeCreditReport.com shows me
that my credit score per Experian is 738, while Bank of America Privacy Assist
shows me that my score is 671 (again, per Experian). I went through both
reports and the information regarding limits, outstanding balances and all other
data is exactly the same. Why am I getting such opposite credit scores? Which
one is trustworthy? Does this credit scoring mechanism really work? I am highly
in doubt if the whole FICO system works well. I am sure another website would
also give me a totally different score. I just don't understand how in the
world this is happening. Thanks in advance for your answer. - Enyew
Hey Enyew,
There's a good reason why you're getting such different
credit scores, despite checking them on the same day: Those two numbers were generated
using different credit scoring models.
Although the FICO credit score is most commonly used in
lending decisions -- and the term
FICO score and credit score are often used interchangeably -- there are plenty of scoring models out there. This can make
things confusing for consumers. "Many consumers, if not most, are
misinformed that there is only one credit score, when in fact, there are
many," says Rod Griffin, director of public education for credit bureau Experian. Those include scores provided
by the major credit bureaus (Equifax, Experian and TransUnion), proprietary
models created by lenders but not shared publicly as well as scores offered to
consumers by various other companies and websites. In your case, those two
different scores are based on information from two different credit reports -- but
neither score is used in lending decisions.
Those sources provided you with so-called
"educational" credit scores, which give you an idea of how lenders
view you, but aren't actually used by banks. FreeCreditReport.com offers the
Experian PLUS Score, which "like all scores provided to consumers online
is an educational score," says Griffin. Bank of America's Privacy
Assist identity protection service, meanwhile, provides the CreditXpert
credit score, which is generated from information in Equifax credit reports. "As
a purely educational score, the CreditXpert Score is not used for lending
decisions," says David Chung, managing director of CreditXpert, in an
e-mail.
The FICO score, however, is used by many lenders in their
decisions about whether to loan you money and at what interest rate. To get a
copy of that score, you can purchase your FICO score from myFICO.com for $15.95
or see if your bank or credit union will provide you with a free FICO score.
As for the scores you received, timing could also be an
issue, since they may be calculated at different times even if you see them on
the same day. Bank of America says the CreditXpert score is updated every 90
days, while Experian says the PLUS score is updated each time the consumer
requests a new credit report. Think back over the past few months: Have you
opened any new accounts or taken on more debt, for example, during that period?
Depending on when in the CreditXpert update cycle you requested that score from
BofA, it could be weighing different information than your PLUS Score.
Meanwhile, these scores also have different numerical
ranges: The Plus score ranges
from 330 to 830, while the CreditXpert score ranges from 350 to 850. The FICO
score, meanwhile, ranges from 300 to 850. In all three cases, the higher the
credit score, the lower the risk that borrower will fail to repay a loan. So
you can get a different score result -- but still have "good" credit
-- under each model.
With all the variation in credit scores, it was smart to
compare your underlying credit reports. You already looked over your Experian
report, but make sure to also check your Equifax and TransUnion reports, too. Those
reports should include very similar information, since major lenders typically
report account data to all three bureaus. But mistakes do happen and could
potentially account for differences in your scores. If you find any damaging errors
on your reports, take steps to correct those negative items. Otherwise, they can drag
down one -- or more -- of your credit scores.
Beyond just finding errors, examining those credit reports
can guide you to improved borrowing behavior. "More important than the
numbers are the risk factors he received in the report provided with the
scores," says Experian's Griffin. "The risk factors explain what from
his credit report most affected the scores. They are usually very consistent
from one score to another, even when the numbers are quite different," he
says. "By using those risk factors to identify what he needs to address in
his credit history, he will improve all of the credit scores calculated using
his credit report."
Good luck!
-- Jeremy
See related: Free FICO scores exist, but aren't easy to come by, Decade-old credit mistakes shouldn't appear on your report
Jeremy M. Simon is a former CreditCards.com reporter who wrote about credit scoring, economic data, credit card crime and other issues. He is based in Austin, Texas. He is a graduate of Vassar College and has previously worked for Thomson Financial in New York City, where he wrote about the stock markets, and Texas Monthly, as well as several publications in Austin.
Send your question to The Credit Score Report.
Published: August 17, 2010
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