Do You Know Which of Your 49 FICO Credit Scores Your Lender Is Looking At?
If you’ve been relying on your FICO score to help you determine whether you qualify for a credit card or loan, you will be disappointed to learn that the score you’re offered by Fair Isaac may not be the one lenders use to determine your eligibility.
According to a recent study presented by the Consumer Financial Protection Bureau (CFPB), lenders may be examining anywhere from 49 FICO scores when deciding whether to grant you a loan, which means you may be completely off-target when you perform a credit score check.
Your FICO Score Isn’t as Accurate as You Think
After years of trying to figure out exactly what your FICO score means when acquiring a mortgage loan, credit card or auto loan, it can be disheartening to learn that the score you check regularly may mean very little when you actually visit a lender.
The CFPB study analyzed 200,000 credit files from the three major credit bureaus: TransUnion, Equifax and Experian. It found that one out of five consumers is likely to receive a FICO score that is “meaningfully” different from the score used by a lender to make a credit decision.
The reason for the discrepancy is that lenders have approximately 49 credit scores to choose from, as opposed to the one score consumers are granted from TransUnion and Equifax. A lender can examine a FICO auto score, a FICO mortgage score, or a FICO bankcard score, among others.
So while you may be making credit-based decisions based on the score offered by FICO, you could still be turned down for a loan or credit card if the score a lender uses is different.
How to Run the Right Credit Score Check
So if lenders have access to dozens of credit scores that are different from those offered to consumers, how can make sure your credit score check is on par with what lenders see?
This question is not an easy one to answer. Consumers are not given direct access to scores lenders and creditors use. So under any circumstance, the consumer score you check from Fair Isaac could be 15 to 20 points higher or lower than the score used to determine whether you qualify for a loan or credit card.
One way to give yourself a better idea of what your score might look like to lenders is to conduct a credit score check from all three credit bureaus. While the average of the scores may not be an accurate figure, it gives you a better idea of how you’re being viewed.
Also, the CFPB recommends that consumers go ahead and shop around for credit, even if your FICO score doesn’t seem high enough to qualify you for a credit card or loan with a decent rate. In many cases, the score presented by Fair Isaac in a credit score check could actually be lower than the FICO score a lender sees, meaning you may actually qualify for better rates than you think.