There is a lot of confusion about credit scores for consumers and the professionals that use them to evaluate risk. One way many get confused is that there are multiple credit scores instead of just one. These scores are sold online and for most individuals there is little understanding about the difference between them. First there is the FICO score which ranges from a 300-850. The FICO score is the most popular score used by bankers to evaluate an applicant’s mortgage risk. This score is sold online to consumers at www.myfico.com. The FICO site offers three scores with each one representing the different bureau information from Experian, Trans Union, and Equifax. Bankers take the middle number of the three FICO scores as the base for evaluating risk. Most banks use the FICO score when evaluating a consumer’s credit risk for a mortgage loan.
There are some banks that use a different variation or model of the FICO score which do not tabulate exactly the same as the scores sold to consumers on the myfico site. This is why sometimes a banker will pull an applicant’s credit score and it can vary from the FICO score pulled online by the consumer. FICO is a company that creates many scores used for varied purposes. Besides FICO scores there are many other credit scores consumers may wind up purchasing online without realizing they are quite different from the score their banker might use to approve their loan.
Here are some of the other scores sold online to consumers:
-National Equivalency Score: sold by Experian and the range is from 360-840
-Vantage 2.0 Score: created by all three credit bureaus and ranges from a 501-990 with letter grades A-F
-Vantage 3.0 Score: newer version which ranges from a 300-850 like the FICO score. Although it is the same range it is not the same as a FICO score.
-Plus score: sold by the bureaus, it ranges from 330-830 and is strictly an educational score.
-Equifax scores: sold and created by Equifax and ranges from a 280-850. It is sold for educational purposes.
-Trans Union scores: range from 300-850 and are also sold for educational purposes.
Why are there so many credit scores available to purchase? There is a lot of money to be made in the credit scoring game. Consumers have been score-obsessed since the economy crashed and restrictions have become tighter with lenders, creditors, vendors, and more. Consumers are very interested in viewing, protecting, and understanding their credit. My next post will be about ordering credit and timing. It will explain why a score can change within an hour.