Why Do Credit Scores Vary

Why Do Credit Scores Vary

Credit Score Variances

For many consumers, checking their credit score can yield a variety of results. With instant access to credit scores now available through most major credit card, bank, and credit services sites, it has never been easier to see where you stand. Credit scores can vary from one service to the next, depending on which credit bureau is providing the information, so it can be confusing to see a different score depending on where you look.

This variance in credit scores can be frustrating for consumers who feel confident that they understand where their score is before applying for credit. For example, there can be a huge difference between a FICO score and a Vantage score. The previous Vantage models could have a score as high as 990, where the highest score in most industry models is 850. In that scenario, you could potentially have a much higher credit score using that older model, but it would not be a true reflection of what the majority of bureaus are reporting.

Another factor that causes variances and misunderstandings is due to many consumers only seeing one score from their credit card company or online.  Not all creditors report to all three of the major bureaus, so knowing one score is OK, however, the other two scores could be higher or lower depending on what is reported to the other bureaus.  Remember, the lender is going to look at the middle of the three scores as the determining factor for interest rates and PMI, on those loan programs that have risk-based pricing differentials.  

The third factor that impacts credit scores is just timing.  Scores are constantly changing due to payment history (each month provides a longer history), credit card balances at the time the score was last pulled and more.  

Almost all lenders and banks use your FICO (Fair Isaac Corp.) score when evaluating credit risk and depend on the three main credit agencies (Experian, TransUnion, and Equifax) to calculate that score. These agencies provide us with the most accurate determination of your score, which helps us discern creditworthiness. Understanding your credit score and your credit report are vital when you are applying for a home mortgage. That is why it is imperative to work with a Mortgage Planner who will take the time to review your score, answer your questions about the scores that you may have seen, and help you understand the process and when needed, be able to assist in improving your scores.

Information provided by:
Ken Pederson
FAIRWAY Independent Mortgage Corp.
801 Estelle Drive
Lancaster, PA 17601
NMLS: 134943
Equal Housing Lender

Tom Blefko Headshot
Phone: 717-587-6600
Dated: December 27th 2017
Views: 111
About Tom: Tom Blefko is the Vice President of Operations for RE/MAX Pinnacle. He is originally from Lancaster...

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