"Think You Just Bought Your Real Credit Score? Think Again"

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities

Did you realize that the credit score you bought isn't the one used by lenders?

I've never bought my credit score.
60
67%
I bought a credit score from Equifax and I thought was the same score a lender would get from Equifax.
4
4%
I bought a credit score from Equifax but I knew it wasn't the same score a lender would get from Equifax.
2
2%
I bought a credit score from Experian and I thought it was the same score a lender would get from Experian.
5
6%
I bought a credit score from Experian but I knew it wasn't the same score a lender would get from Experian.
2
2%
I bought a credit score from MyFico and I thought it was the same score a lender would get from Fair Isaac.
7
8%
I bought a credit score from MyFico but I knew it wasn't the same score a lender would get from Fair Isaac.
4
4%
I bought a credit score from Transunion and I thought it was the same score a lender would get from Transunion.
4
4%
I bought a credit score from Transunion but I knew it wasn't the same score a lender would get from Transunion.
2
2%
 
Total votes : 90

"Think You Just Bought Your Real Credit Score? Think Again"

Postby nisiprius » Sun Mar 24, 2013 6:12 pm

Time magazine: Think You Just Bought Your "Real" Credit Score? Think Again.
...the score you pay for isn’t the score lenders use, and a new study shows roughly one in five of us get a score that’s very different from the one lenders see — and there’s no way to find out if you’re in that unlucky minority....

...The Consumer Financial Protection Bureau looked at 200,000 anonymized credit files and compared the scores consumers get when they buy with the ones that lenders purchase. It used four credit-quality brackets for the study: below 620, 620-680, 680-740 and above 740.

In 73% to 80% of cases, the results were pretty close, enough so that people stayed in the same credit bracket. However, the CFPB found that in 19% to 24% of cases, the differences between scores were big enough that people jumped up or down one credit category. Up to 3% of consumers’ files had scores that were so far off it would knock them two categories up or down the spectrum....

...there’s no way for a borrower to know if a score they bought is anywhere near the score the lender saw. Credit bureaus don’t sell the scores used by lenders to regular people, which is a bone of contention with consumer advocacy groups....

It is likely that many consumers incorrectly believe that the scores they purchase are the same scores used by lenders in evaluating their applications for credit...
DId other Bogleheads understand this?
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby Mudpuppy » Sun Mar 24, 2013 6:18 pm

There is no one score that all lenders use, even within a single score family like FICO. Each score family has different variations, and creditors can choose which variation they want for that particular credit pull. I forget the exact number, but there are well over two dozen different credit scores once you consider the different score families and the variations within a score family. There was a good infographic on this, but I don't seem to have it bookmarked anymore. I'll come back if I can find the link.

Edit: Here we go: http://www.creditsesame.com/blog/scores ... -you-have/
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby nisiprius » Sun Mar 24, 2013 6:26 pm

Thanks, Mudpuppy, that was an eye-opener for me.

So Equifax, Experian, and TransUnion are basically fibbing (or Mr. Clueless Consumer isn't listening carefully enough) when they imply that they have all gotten together and are all using VantageScore now?
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby tj » Sun Mar 24, 2013 6:39 pm

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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby whaleknives » Sun Mar 24, 2013 7:05 pm

My credit union provides a free credit score service from Credit Karma™. I have no idea how accurate or uniform it is.
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby p_qrs_t » Sun Mar 24, 2013 7:32 pm

So here is a question: when we refinanced our loan, the mortgage agent sent us a credit score for my spouse and I from each of the three agencies. Presumably, that is the score that is going to the broker, who will then use that to try to sell the loan to Fannie/ Freddie etc.

Is that a reliable credit "score" recognizing there are 20-30 potential different numbers out there?
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby DetroitRed » Sun Mar 24, 2013 8:04 pm

The credit score system is such a mess. Well, at least I have a higher credit score than Warren Buffett --


"Fortune Magazine reported that Warren Buffett has a FICO score of 718"

http://www.myfico.com/crediteducation/a ... score.aspx
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby LadyGeek » Sun Mar 24, 2013 8:17 pm

The wiki has background info: Credit score

I've never had a need to purchase a credit score per se. My last known score was when I refinanced my mortgage - the loan processor told me what it was.
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby Mudpuppy » Sun Mar 24, 2013 8:33 pm

p_qrs_t wrote:So here is a question: when we refinanced our loan, the mortgage agent sent us a credit score for my spouse and I from each of the three agencies. Presumably, that is the score that is going to the broker, who will then use that to try to sell the loan to Fannie/ Freddie etc.

Is that a reliable credit "score" recognizing there are 20-30 potential different numbers out there?

You were likely given a copy of your mortgage scores. I got those too when I refinanced. Credit card lenders might pull a different variant of FICO, assuming they even use FICO. Auto lenders could pull another variant. And so on.

Take them as a ballpark, not an absolute.
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby nisiprius » Sun Mar 24, 2013 9:26 pm

LadyGeek wrote:The wiki has background info: Credit score
I think the wiki article could perhaps use a little tweaking in light of what's transpired in this thread. The wiki article does sort of give the impression that there is such a thing as "your" credit score, and doesn't spell out the many different FICO scores nor the fact that when you buy "your" score from credit bureau X, it is not likely to be the same score lenders will buy from credit bureau X. I'll do it when I get a Round Tuit unless someone else beats me to it.

I've never bought a score. I got "my" TransUnion score for six months as part of some class action settlement, and I got what I thought was my FICO score--silly me, to think that MyFico score was my FICO score--by signing up for a two-week free trial and canceling. So I guess we're even, I cheated Fair Isaac by signing up for a service I had no good-faith intention of using, and they cheated me by giving me something different from what I thought I was getting.
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby momar » Sun Mar 24, 2013 9:35 pm

This kind of stuff is an outrage.

On the other hand, if credit scores are going to be useful, should people really be able to manipulate them? On the other other hand, if they are manipulating them by doing things that people with good credit do isn't that just as good as if they did those things without the intention of manipulating? On the other other other hand, that is all fine until you are the last lender holding the bag and they decide they don't care anymore.
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby winglessangel31 » Sun Mar 24, 2013 9:55 pm

I, too, have never bought my credit score; CreditKarma, CreditSesame, and Quizzle are my friends when I need a number to feel good about. I saw a numerical score on a piece of paper (think it was the fees and terms descriptions) that came with a recent credit card, though.
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby kitteh » Sun Mar 24, 2013 11:05 pm

whaleknives wrote:My credit union provides a free credit score service from Credit Karma™. I have no idea how accurate or uniform it is.


My credit union provides a free credit score from Equifax, by monthly secure email on the credit union website. I have no idea how accurate or uniform it is.
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby rr2 » Sun Mar 24, 2013 11:14 pm

When we started looking seriously for a house, both my wife and I ran our credit reports and scores using myfico and a coupon. I showed those to a mortgage broker in order to get an opinion about what sort of rates we would qualify for.
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby mhc » Sun Mar 24, 2013 11:53 pm

I don't think looking at brackets is the proper methodology. If one report was at the top of a bracket, but the other report showed it should be at the bottom of the next bracket up, this would count as an inaccurate report even though the difference might only be one point. This could really skew the results. The reporter should present a better analysis. Maybe a histogram of percent error.

Without a doubt the problem might be the different reports, but the analysis does not seem correct to me.
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby tfb » Mon Mar 25, 2013 1:29 am

There are mortgage scores, credit card scores, insurance scores, etc. When you buy your score, they don't know which you flavor you want, which lender you will use, or which model that lender uses. Of course it's not going to be the same score your lender will see. It doesn't make the score you bought unreal. It's real, just different.

I bought my scores when I refinanced (the lender put the charge on my closing statement). They are the same scores the lender saw.
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby Mudpuppy » Mon Mar 25, 2013 4:34 am

momar wrote:This kind of stuff is an outrage.

On the other hand, if credit scores are going to be useful, should people really be able to manipulate them? On the other other hand, if they are manipulating them by doing things that people with good credit do isn't that just as good as if they did those things without the intention of manipulating? On the other other other hand, that is all fine until you are the last lender holding the bag and they decide they don't care anymore.

Off topic, but I always use "on the gripping hand" (scifi novel referenced) for the third hand options :)

Back on topic, I don't think they hide the different scores because they don't want people to manipulate them. It's all about the marketability of the product. Most people will suffer decision paralysis if presented with a plethora of choices for their scores.
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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby nisiprius » Mon Mar 25, 2013 3:23 pm

I think they saw a lemon (mandated free disclosure of credit reports) and made lemonade out of it. People have to come to us to get their credit report, giving us an opportunity to sell them (one of their many) credit score(s).

I don't think I have ever seen a pitch for purchasing one, or an article about them, that ever used the plural. It's always "know your credit score," singular. Yes, your Transunion score, singular, is different from your FICO score, singular... but would you guess from this that there was more than one "FICO score?" Doesn't it give the impression that when you buy this, you are getting "the" number?

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Re: "Think You Just Bought Your Real Credit Score? Think Aga

Postby Phineas J. Whoopee » Tue Mar 26, 2013 10:20 pm

In addition to what other posters have written, there are many scoring systems and vendors. Several years ago, when I was about to engage in a transaction, my representative pulled a score (which he said, at least, was based on one of the major credit agency's reports but I don't recall which, and further claimed was the customary scoring mechanism used in such transactions in that locale) in which the best scores were low. I was gratified to learn mine was in the single digits, but more interested to learn how little "your credit score" can mean.

The important thing, in my opinion, isn't so much one score under one numbering system, but what the end-user of the score is doing with it. When I bought a home I didn't receive a loan from a credit agency or Fair Isaac or any of that ilk, but from a lender. If an insurer pulls a score, I'll get a premium quote from them. If a potential employer pulls a score I'll get an offer (or not) from them.

Even if the scores were uniform, which they are not, the users of those scores would be anything but.

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