I’m shopping for home equity loans, and making a few applications. As a result, lenders are running my credit score. I also, through my bank account, have access to my FICO score, which is updated regularly.
Here’s the thing, though: When I got back one application from a lender, it has my credit score (taken from Experian, they say) listed as 50 points higher than what my bank lists my FICO score as!
This is a … rather large ? … discrepancy? What exactly is going on here? I’m pleased the lender prefers to use a higher credit score for me, but what good is my bank’s FICO score to me if it’s off by an entire category (or two!)?
The score the banks use is different from the score you get from the big three reporting agencies. And the numbers don’t actually align with each other. I found this out when I applied for my first mortgage 15 years ago.
My bank told me that my credit score was 50 points under what the big three was reporting. But I still qualified for the lowest rate. I asked how I could get a copy of the report they used and was told I could not, that I was only entitled by law to the report the big three reported. It’s bullshit from what I can tell.
My understanding is that each bank uses its own, self-developed credit scoring model, which may or may not use the same scale as another bank or a scoring agency. When your bank obtains the score from an agency, that score is translated into the bank’s model. It may also be that the bank uses input data other than the external score that feeds into its own model.
The report won’t really tell you anything about your credit score. The only point of checking the report is to make sure there aren’t things on there that should be.
There are literally dozens of different types of credit scores, some with different scales, so it’s not unusual for them to not align. They are for different purposes with differing inputs, and the ones consumers have access to aren’t necessarily the ones banks use when evaluating you for a loan.