Why Are My Credit Scores So Hard Find?

You’ve worked really hard to pay down your debt and on time, checked your credit reports and fixed any errors, done all the things you’re supposed to do to drive up your score.  Now you’re ready to take you’re 720 credit score and march into your creditor’s (or potential creditor’s) office and start demanding the best terms, right?  Not so fast.  Don’t be surprised if your creditor is looking at a different score than you are.  Here are a few reasons why.

It’s probably not a FICO Score.  Most “free” credit scores available today are mostly estimations of a FICO score. What difference does it make you ask? While these substitute scores are a good gauge of your credit health they’re not what most lenders are using to make actual credit decisions.  For that, the overwhelming majority of creditors turn to FICO scores.  You can check you’re FICO score at myFICO.com but it’s not free.

It’s probably an input to a different score.  Even if you do know your FICO scores most lenders use custom built “application” models that, in addition to FICO score, weigh other factors like household or individual income, whether you own or rent or whether you have a savings or checking  account.  Next time you fill out an application, pay attention to what they’re asking – it’s probably going into their models.

They may not be using a credit bureau score at all.  If you’re calling your credit card company asking for a credit line increase or a better rate they already have a wealth of more relevant data at their disposal such as how you’re paying and using the card.  Are you making minimum payments or paying it off each month?  Has that changed in the last 3-6 months? How much of the line do you revolve?  When was the last time your line was increased?  All these factors typically go into what’s called a “behavior score” which has historically proven to be a better predictor than credit bureau scores in the shorter term.

It’s almost certainly not the only factor in their decision. Aside from whatever score or model is being used, today’s automated credit decision systems are able to incorporate multiple data points. Mortgage lenders may be looking at loan to value ratios or auto lenders might want to incorporate down payment or trade-in values.  Both of these are very important factors and neither is on your credit reports and because of that can’t be considered by a credit bureau score.

Don’t misunderstand, staying on top of your credit score and maybe more importantly what’s on your credit report, is critically important to maintaining your credit health.  Even with the mitigating factors mentioned above, credit score and FICO scores specifically are a hugely important factor for lenders in most credit decisions.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

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