Why is my credit score different when a lender pulls it?

Why are consumers so confused about credit scores? Why is my credit score different when a lender pulls it compared to what I just bought online?

Credit Scoring leader FICO(r) has over fifty different versions of scores with many different ranges. On top of that, the repositories created their own credit score called Vantage(r). Vantage Scores have a different range for each version of their score. This is part of my continuing education class I did for MSHDA at their annual Building Michigan Communities Conference. We pick up the presentation when I am explaining why the repositories decided to team up and create a competitor to FICO.

Experian, Equifax and TransUnion said….So FICO is making all this money based on our (the repositories) data, what if we came up with a credit score to compete with FICO? Someone said OK that sounds like a good idea. We will call it Vantage, but we will make our range slightly different than the FICO range, it will overlap on the top side 501-990.

As we know FICO is 300-850, If people go out to www.AnnualCreditReport.com and they pull their credit score from that federally mandated website, they are going to get a Vantage Score.

The problem is, a borrower can have a Vantage score of 700 and when the lender goes to pull that same borrowers credit report they could have a 599 FICO score. This is where consumer gets mad at the mortgage company thinking the mortgage lender is trying to rip them off. The consumer would say “I have a 700 credit score but you pulled my credit and you are saying it is a 599”. There are not very many borrowers getting a mortgage at 599.

Why did Vantage do that? Anyone have an idea why Vantage would make a credit score that overlapped the high side of the industry standard FICO? I am a conspiracy guy, so I think that they did it on purpose, to create confusion over credit scores, but that is just me.

That went along fine they created lot’s of confusion over credit scores and Vantage said let’s update this. We’re going to create something called Vantage 3.0 and change the range to 300-850. I have heard that range before somewhere right? It is of course the same range as FICO. Vantage 3.0 is now using 300-850.

I think that is a big improvement for consumers because the scores will be closer over all, in between the two models. Vantage scores will no longer be so vastly different from FICO, although they will still not be exactly the same.

One thing that makes them different is how rental accounts are scored. Rent is included in the Experian main Database and counted toward a borrower’s Vantage score. It is not however, counted in the FICO scoring model.

So if you had someone with a rental account on their credit report. The borrowers Vantage score could be significantly different than their FICO score.

How did the rental information get into the Experian database? Well there was this company call RentalBureau that Experian bought and now include in their data in the main Experian database. RentalBureau is a company that went to large apartment complexes and collected payment information to create the database. If you have one or two rentals you cannot report to them. Rentalbureau only wants complexes that report fifty or more files a month. They did come up with a way to report for smaller landlords but the renter has to pay Experian directly and the landlord collects the money from Experian after a fee.

At this time you are only improving your Vantage score that will not help you with a mortgage application.

If you’re looking for other ways to improve your credit score please go to GetLoanReady.com you can get free videos and worksheets to increase your credit score from a more holistic perspective. Never Pay Collections

If you want to see more videos about credit and credit scoring check these out at www.thecreditguy.tv. If  you are a mortgage lender please share this on your Facebook or LinkedIn page.   If you have any questions, leave them down below I’d be happy to answer them.

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Go to www.getloanready.com to find other ways to improve your credit score. I’m Dave Sullivan here for the credit guy TV so you with a little bit me we’re going to change the credit industry thank you

Why is my credit score different when a lender pulls it?

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