I’m Sorry... But There Must Be a Mistake; My credit score is what?

When was the last time you checked your credit score?

Chances are, in today’s information age, you’ve taken a closer look at your score somewhere along the way in recent months. Just turning on the television leaves you inundated with commercial after commercial, each encouraging us as consumers to keep a check on our scores. But did you know that your personal credit score can vary from one site to the next? Have you ever wondered why? Let’s find out some answers together.

Let’s start with the three main credit reporting agencies. There’s Equifax, Experian, and TransUnion, and each company is independent of the other. Remembering this key fact is essential: Lenders report your credit activity to the reporting agencies. Each agency interprets that information into what you and I might consider complex algorithms to devise a score. We found one consistency in our research: Each agency considers similar factors when coming up with your specific score. Read on to learn a bit more about these factors.

But let’s back up for just a second. In 1989, Fair Isaac Corporation, a diverse analytics software company, developed the first widely used credit score model. This score is called FICO. Today, the FICO model for creditworthiness has become one of the most commonly relied on and respected models used by lending institutions throughout the US. Before FICO, lenders imposed their own scoring models based on their specific risk assessment. So, you could only imagine those variations in a person’s credit score. But with this new standardized FICO, why do similar credit types still have varying scores?

Credit professionals will tell us that it is perfectly normal for credit scores to vary from site to site. The complexity of credit scoring can be overwhelming for the average business owner. Our goal is to provide simple, easy-to-understand answers. So, we’ve explored the question of “why?” and outlined below, you’ll find the most common answers.

It is up to the lenders to report what data they wish to report and to which of the three key agencies. One lender may favor one reporting agency, while another may prefer another.

There are different versions of FICO available. Since its inception, FICO has seen updates. When a new version is released, it becomes accessible to any lender wishing to accept the update. As a result, one agency may rely on older versions, while another may have access to the most up-to-date version. The variation in these versions can cause scores to vary.

Despite this generalized score, FICO models have been perfected over the years. Today, models can vary based on the types of credit being sought. For example, credit card models differ from auto loans, and commercial equipment models may vary from mortgage models.

Check your dates. Something as simple as a date can cause your score to differ from one site to the next. Scores update, and when information is reported, this may vary more regularly than others.

So, the next time you check your score, and it varies with a lender, know the possible reasons why. Then relax. It’ll make you much happier.

Important Take-Aways About Credit Scoring And Varying Models

• FICO generates a scoring model by viewing data reported by lenders to the three credit reporting agencies. With over 10 billion FICO scores purchased each year, it’s estimated that over 90% of lending institutions rely on this scoring model when making credit decisions.
• Vantage Score is an up-and-coming score model developed by credit report agencies, but it’s not yet the industry-leading standard.

Companies such as Credit Karma or Credit Sesame are all very viable credit monitoring resources. They, too, rely on very similar models such as FICO and Vantage Score. But we must be reminded that these companies are for-profit entities and earn revenues by providing consumers with loan products.

Credit professionals tell us that it may be impossible for every consumer to keep track of and monitor their scores based on the many models available. So, we must be aware of score variances.

Credit scores are correlative. i.e., most scores are historically very similar with limited exceptions. If you’re rated “good” with one model, most likely, you will be rated “good” in the opposing model.

The Bigger Picture: Our Customers Are More Than A Number

This is an excellent time to remind you that our risk model is not exclusively score-based at Tri-Lease. We believe our customers are far more important than a number. In fact, as a commercial lending provider, our decisions are based on many other factors, both commercial-oriented and consumer-oriented (when required). We consider such things as how long a company has been in business, the type of equipment being purchased, and how vital that equipment is to the business. We also consider the company’s financial strength by looking more closely at business reports such as the most common, Dun & Bradstreet. But when required, there may be no escaping the ever-changing personal credit profile of the business owner. When we do, we look at a broader picture beyond the 8-digit number assigned to you. How many account trade lines are open and the overall pay history of those trade lines, how long those accounts have been open, what type of accounts they might be, and the size of those accounts all factor into our decision process. So, when choosing a lending partner, select a provider that looks at you as a person rather than just a number.

Why Not Give Tri-Lease A Call Today at 866-590-2220 And See How We Can Help You with Your Next Small Business Loan Or Equipment Purchase.

To learn more on this topic, here are some Supporting Websites we think might be helpful.

 https://www.experian.com, https://www.experian.com, https://www.experian.com, https://www.annualcreditreport.com, https://www.annualcreditreport.com, https://www.annualcreditreport.com, https://www.transunion.com, https://www.transunion.com,  https://www.transunion.com/,  https://www.creditkarma.com, https://www.creditkarma.com, https://www.creditkarma.com, https://www.equifax.com, https://www.equifax.com, https://www.equifax.com, https://www.vantagescore.com, https://www.vantagescore.com, https://www.vantagescore.com, https://www.myfico.com, https://www.myfico.com,  https://www.myfico.com, and https://www.creditsesame.com