Credit score mystery

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softmax
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Credit score mystery

Post by softmax »

Hi Bogleheads,

I was talking to a lender who provided me a pre-approval letter for a home loan. He mentioned that my credit score is 760, which is "perfect" by their standard. In Credit Karma, both of my scores are ~800 and the FICO score provided by my AMEX credit card is 772.

I figured that lenders may use a score system. I wonder how I can get a more accurate estimate because apparently Credit Karma isn't very reliable.

Thanks in advance!

softmax
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JoeRetire
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Re: Credit score mystery

Post by JoeRetire »

softmax wrote: Tue Sep 22, 2020 10:11 am I was talking to a lender who provided me a pre-approval letter for a home loan. He mentioned that my credit score is 760, which is "perfect" by their standard. In Credit Karma, both of my scores are ~800 and the FICO score provided by my AMEX credit card is 772.

I figured that lenders may use a score system. I wonder how I can get a more accurate estimate because apparently Credit Karma isn't very reliable.
I suspect when the lender said "perfect", they really meant "good enough to get pre-approved here".

You can always ask where they found that 760 credit score, but it seems like a waste of time. There's no one "more accurate estimate", since you can't know ahead of time which credit scoring system a lender will use.
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arcticpineapplecorp.
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Re: Credit score mystery

Post by arcticpineapplecorp. »

softmax wrote: Tue Sep 22, 2020 10:11 am Hi Bogleheads,

I was talking to a lender who provided me a pre-approval letter for a home loan. He mentioned that my credit score is 760, which is "perfect" by their standard. In Credit Karma, both of my scores are ~800 and the FICO score provided by my AMEX credit card is 772.

I figured that lenders may use a score system. I wonder how I can get a more accurate estimate because apparently Credit Karma isn't very reliable.

Thanks in advance!

softmax
credit karma uses Vantage score, that's not the same as FICO.

https://www.google.com/search?client=fi ... +karma+use

mystery solved.

i love a good mystery.
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Topic Author
softmax
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Re: Credit score mystery

Post by softmax »

arcticpineapplecorp. wrote: Tue Sep 22, 2020 10:17 am
softmax wrote: Tue Sep 22, 2020 10:11 am Hi Bogleheads,

I was talking to a lender who provided me a pre-approval letter for a home loan. He mentioned that my credit score is 760, which is "perfect" by their standard. In Credit Karma, both of my scores are ~800 and the FICO score provided by my AMEX credit card is 772.

I figured that lenders may use a score system. I wonder how I can get a more accurate estimate because apparently Credit Karma isn't very reliable.

Thanks in advance!

softmax
credit karma uses Vantage score, that's not the same as FICO.

https://www.google.com/search?client=fi ... +karma+use

mystery solved.

i love a good mystery.
Thanks. How about the FICO score provided by AMEX? Why is it still different from what lenders use?
Topic Author
softmax
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Re: Credit score mystery

Post by softmax »

JoeRetire wrote: Tue Sep 22, 2020 10:16 am
softmax wrote: Tue Sep 22, 2020 10:11 am I was talking to a lender who provided me a pre-approval letter for a home loan. He mentioned that my credit score is 760, which is "perfect" by their standard. In Credit Karma, both of my scores are ~800 and the FICO score provided by my AMEX credit card is 772.

I figured that lenders may use a score system. I wonder how I can get a more accurate estimate because apparently Credit Karma isn't very reliable.
I suspect when the lender said "perfect", they really meant "good enough to get pre-approved here".

You can always ask where they found that 760 credit score, but it seems like a waste of time. There's no one "more accurate estimate", since you can't know ahead of time which credit scoring system a lender will use.
He said they use FICO, which seems to be different from what AMEX provides.
MrJedi
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Re: Credit score mystery

Post by MrJedi »

There are a lot of different scores out there.

Here's some good reading material if you're curious or bored.

https://www.myfico.com/credit-education ... e-versions

https://ficoforums.myfico.com/t5/Unders ... -p/1197617

The scoring systems are still proprietary formulas, but here's a lot of really detailed technical information that's been slowly reverse engineered over time by some enthusiasts.

https://ficoforums.myfico.com/t5/Unders ... -p/6023348
retiredjg
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Re: Credit score mystery

Post by retiredjg »

softmax wrote: Tue Sep 22, 2020 10:31 am Thanks. How about the FICO score provided by AMEX? Why is it still different from what lenders use?
Your FICO score is not one thing. There are many different scores, each calculated for a different scenario. Your mortgage FICO may be different from your credit card FICO which may be different from your....you get the idea.
wfrobinette
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Re: Credit score mystery

Post by wfrobinette »

retiredjg wrote: Tue Sep 22, 2020 11:51 am
softmax wrote: Tue Sep 22, 2020 10:31 am Thanks. How about the FICO score provided by AMEX? Why is it still different from what lenders use?
Your FICO score is not one thing. There are many different scores, each calculated for a different scenario. Your mortgage FICO may be different from your credit card FICO which may be different from your....you get the idea.
Trying to understand it is just pointless. As long as it's good enough to get the best credit and insurance rates, I'm happy.
toast0
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Re: Credit score mystery

Post by toast0 »

softmax wrote: Tue Sep 22, 2020 10:31 am
arcticpineapplecorp. wrote: Tue Sep 22, 2020 10:17 am
softmax wrote: Tue Sep 22, 2020 10:11 am Hi Bogleheads,

I was talking to a lender who provided me a pre-approval letter for a home loan. He mentioned that my credit score is 760, which is "perfect" by their standard. In Credit Karma, both of my scores are ~800 and the FICO score provided by my AMEX credit card is 772.

I figured that lenders may use a score system. I wonder how I can get a more accurate estimate because apparently Credit Karma isn't very reliable.

Thanks in advance!

softmax
credit karma uses Vantage score, that's not the same as FICO.

https://www.google.com/search?client=fi ... +karma+use

mystery solved.

i love a good mystery.
Thanks. How about the FICO score provided by AMEX? Why is it still different from what lenders use?
FICO makes available several scoring products; and the one you get free is usually not the one your prospective lender uses, because, that would be useful information. :annoyed Also, depending on which credit reporting agency(ies) they get their data from, even if they use the same scoring system, they might get different results, because not every account reports to all the agencies, etc. A home loan lender is likely to pull reports from multiple agencies, but a free score is probably pulling from a single agency.
terran
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Re: Credit score mystery

Post by terran »

Maybe the lender only shows its employees the band an applicant's score is in ("this applicant has an excellent score of 760+")? Or maybe the employee made it a band when talking to you ("you're score is over 760, which means it's excellent")?
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willthrill81
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Re: Credit score mystery

Post by willthrill81 »

retiredjg wrote: Tue Sep 22, 2020 11:51 am
softmax wrote: Tue Sep 22, 2020 10:31 am Thanks. How about the FICO score provided by AMEX? Why is it still different from what lenders use?
Your FICO score is not one thing. There are many different scores, each calculated for a different scenario. Your mortgage FICO may be different from your credit card FICO which may be different from your....you get the idea.
While there are many credit scores, it seems to me that most are strongly correlated with each other. If you have paid all of your bills on time for the last seven years, you haven't opened lots of new credit accounts, and your credit utilization is low, you'll have a strong score no matter which one is used.
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afan
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Re: Credit score mystery

Post by afan »

If they pulled a credit report on you they should show you the score. That will include which agencies they used and the model.
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beachairs
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Re: Credit score mystery

Post by beachairs »

Recently went through a refinance. Over the course of 4-5 weeks, they seemed to check our credit scores at least 3 times (initial application, locking the rate and at closing)--we had to sign off on the documents each time. Numbers were different each time (husband and I), with no correlation to which of the 3 bureaus had the highest. I think DH had 790-820 and I had 810-825. Nothing on our credit was changing over the month aside from maybe few hundred bucks charged to a credit card. Expect some variability.
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jfn111
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Re: Credit score mystery

Post by jfn111 »

Banks usually use the middle mortgage score. They run all three credit bureaus and if you had a 780, 760 and 740 from the 3 bureaus they would use the 760 score.
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celia
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Re: Credit score mystery

Post by celia »

JoeRetire wrote: Tue Sep 22, 2020 10:16 am You can always ask where they found that 760 credit score, but it seems like a waste of time. There's no one "more accurate estimate", since you can't know ahead of time which credit scoring system a lender will use.
I have no problem asking which credit bureau they use, and they tell me. This is needed if you freeze your credit bureau access and need to un-freeze the right one, when obtaining new credit.
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Re: Credit score mystery

Post by nisiprius »

FICO sells customers something like two dozen different kinds of credit scores, for different purposes. There isn't any such thing as "the" FICO store.
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Re: Credit score mystery

Post by surfstar »

When you review the docs, you'll see the credit report. They're required to provide a copy of it when they run your credit. That should let you know what system it is from.
quantAndHold
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Re: Credit score mystery

Post by quantAndHold »

There are a bajillion different credit scores. You’re not going to get the *real* credit score without spending money.

Beyond knowing that you’re in the highest tier, what does it matter?
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NewMoneyMustBeSmart
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Re: Credit score mystery

Post by NewMoneyMustBeSmart »

jfn111 wrote: Tue Sep 22, 2020 4:59 pm Banks usually use the middle mortgage score. They run all three credit bureaus and if you had a 780, 760 and 740 from the 3 bureaus they would use the 760 score.
Agree, in my case they took my middle, and my wife's middle; and then the lower of the two to price our mortgage refi.
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neverpanic
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Re: Credit score mystery

Post by neverpanic »

nisiprius wrote: Tue Sep 22, 2020 6:18 pm FICO sells customers something like two dozen different kinds of credit scores, for different purposes. There isn't any such thing as "the" FICO store.
And the formulas change all the time.

The thing to know is that - for lending purposes - 760 and 800 are essentially the same number, but 720 and 760 are not. That may not always be the case, but when you walk in 760+ these days, you're good.
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Incognito
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Re: Credit score mystery

Post by Incognito »

The scoring confounded me too. DW is stay-at-home mom and her credit score (as per the ones shown by Credit card apps), is a good 25 points more than mine at nearly 850.
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Re: Credit score mystery

Post by TomatoTomahto »

neverpanic wrote: Wed Sep 23, 2020 2:57 pm
nisiprius wrote: Tue Sep 22, 2020 6:18 pm FICO sells customers something like two dozen different kinds of credit scores, for different purposes. There isn't any such thing as "the" FICO store.
And the formulas change all the time.

The thing to know is that - for lending purposes - 760 and 800 are essentially the same number, but 720 and 760 are not. That may not always be the case, but when you walk in 760+ these days, you're good.
Is that also the case for other credit score uses, specifically for insurance purposes? We straddle 800 for some reason, and sometimes go as low as 780. They say it’s because we haven’t had a mortgage for almost 20 years. I would hate for such a stupid reason to increase our insurance premium.
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Re: Credit score mystery

Post by RyeBourbon »

There's also something called a bankruptcy score.
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softmax
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Re: Credit score mystery

Post by softmax »

Thanks for all the replies.

I posted the original question because not understanding how the algorithm works makes me fear that my score could fall below their "threshold" for unexpected reasons. As you can tell, at 760 I probably don't have enough safe margin. What's more tricky is that I don't have any debt (besides credit cards) so my score doesn't grow.

I'm especially concerned about the number of inquiries. Previously I got pre-approved by two banks (one of them was underwritten but only valid for two months) on the same day but they showed up as two separate inquires on my credit report. This surprised me because I read that HPs within 14 days are "merged". Now I renewed the letter because I literally wasted my first pre-approval due to COVID, which is my third HP within the last 12 months.
retiredjg
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Re: Credit score mystery

Post by retiredjg »

Different hard pulls would be listed separately on the reports, but the number can still be merged for the algorithm.
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mmmodem
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Re: Credit score mystery

Post by mmmodem »

softmax wrote: Wed Sep 23, 2020 11:22 pm What's more tricky is that I don't have any debt (besides credit cards) so my score doesn't grow.
This is incorrect. Length of credit and payment history accounts for 50% of your score. You do not need to carry debt to increase your score.
https://www.myfico.com/credit-education ... edit-score
softmax wrote: Wed Sep 23, 2020 11:22 pm I'm especially concerned about the number of inquiries. Previously I got pre-approved by two banks (one of them was underwritten but only valid for two months) on the same day but they showed up as two separate inquires on my credit report. This surprised me because I read that HPs within 14 days are "merged".
They are merged for the score but still counted as separate inquiries.

Most lenders use the FICO 8 score. You can certainly ask the lender which of the 3 bureaus they use if you want to check. Some lenders check all 3. The only bank I know that gives a FICO 8 score for free is with a Discover card. Every other bank that I've encountered uses some other type of scoring system for their free credit score. I don't have an Amex so I don't know about their scoring system.

My dad once told me how he disliked his Discover card credit score. It's always the lowest. He prefers to track his score with his other credit cards. And now I understand why the FICO score goes to 850 and the Vantage score and others max out at 900.
michaeljc70
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Re: Credit score mystery

Post by michaeljc70 »

retiredjg wrote: Tue Sep 22, 2020 11:51 am
softmax wrote: Tue Sep 22, 2020 10:31 am Thanks. How about the FICO score provided by AMEX? Why is it still different from what lenders use?
Your FICO score is not one thing. There are many different scores, each calculated for a different scenario. Your mortgage FICO may be different from your credit card FICO which may be different from your....you get the idea.
Also, there are different credit bureaus and they don't typically have the same exact data for the same person.

I find that the scores mostly/roughly proportionally correspond for people with normal credit. Different scores have different ranges so you need to take that into account. I just checked and on CreditKarma (Vantage) I have 821 , on Discover (Fico 8) I have 825, Chase (Vantage) shows 818 and Amex (Vantage) shows I have 821. All pretty close.

There is no credit scoring system I know of where 760 is a perfect score. Perfect for a mortgage score is usually 850. You can have "perfect" credit and 760 I guess meaning you have no bad marks on your credit report even though the score isn't the highest.

This chart is for the Experian credit bureau only:

Image
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