I’ve heard that credit scores may vary depending on how your score is pulled. Is this true? |
By Laura Gutmann on August 9, 2010
.jpg.aspx) Many people use one of three major companies - Experian, Equifax, and TransUnion – to check their credit report each year. This can help ensure that the report is accurate, and that you are aware of any issues that are dragging down your ability to get approved for future lending. For a small additional fee, your report will include your credit score, so you can gain an idea of where you stand, especially before making a major purchase that will require a loan, like a mortgage. However, it is important to know that each of these companies has their own way of calculating your score, even though they may be similar in their approach. Their calculations and the range of score possibilities are often slightly different than your official FICO score, which is the one that lenders normally see.
FICO stands for Fair Isaac Corporation, and their formula takes the information generated by the credit bureaus to further analyze your data and determine your financial health. Your ultimate score may depend on which credit bureau they use to make their initial determination. Sometimes lenders will only pull information from one company, while others may pull from all three. Because there is variation among the companies, lenders might see something that isn’t quite the same as what you anticipated.
The best approach to ensuring a higher score includes making an effort to be responsible with your finances – that’s the part that’s under your control. If you know you’re going to be applying for a loan, you can, “work to improve your overall credit picture by paying bills on time, limiting balances to below 30% of your credit limits and keeping old accounts in good standing active”1. In the end, if you are reducing your debt to a healthy amount and keeping up with regular payments, you won’t have nearly as much to worry about.
A good score is key to having loan offers from multiple banks, so you can choose the agreement that is the best match for your needs. It may also allow you to get a loan with a much lower interest rate than someone with a lower score.
Source:
1 http://www.smartmoney.com/spending/deals/key-credit-score-to-be-hidden-from-consumers/
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