Question On What Scores Lenders Look At
When a lender is looking at your credit score aren't they looking at your FICO score? The reason that I ask is that one lender told me not to rate shop because the pulls on my credit would lower my score. I was under the impression though that pulls for a mortgage within the same month only count as one pull for your FICO score. What other scores would they be looking at that this activity could hurt me. Also can I ask them where they pull thier scores from?
Thanks
Joe
[addsig]
OK now I am confused. I thought that fair Issacs was an independent org. not a part of any of the three bureas. I thought that the three bureaus have thier own credit scoring system and that FICO has it's own system as well. The pulls won't hurt the FICO score but will hurt the scores from the bureaus scoring am I correct or no?
Joe,
Lenders look at the middle of 3 scores or the lower of 2, but thats not all they also look for collections/charge offs that are unpaid, debt ratio, reserves etc...however depending on the property and the program (and there are thousands of loan programs) none of the above count!! I have a program a conv. program that waives the fico requirement for a point. so to help you my advise is to find a good mortgage broker one who has been in the business at least 10 years full time ask him for a niche of no fico or no ratio or no reserves something creative and let him show you the money. good luck
I think there is some confusion here on what exactly FICO means. FICO is an acronym for Fair Isaacs Credit Organization, aka, Experian. This is just one of three credit bureaus. The other two are Transunion, and Equifax.
Most lenders are going to look at the middle of the three. In my experience as a broker, Experian is usually the lowest.
Someone could pull your credit ten times in a month, and it will show as ten pulls. This WILL lower your score. I've seen it drop someone's score by 30 points (cuz they were shopping their deal and multiple brokers were pulling credit).
The post previous to mine is good advice. Find a broker who will waive the score requirements for a bump in rate. There are a few banks that I am familiar with that will do this. Can't beat a program like this!
Hope this clears things up. Good luck!
When you pull credit, it shows you three scores. One is called a FICO score, through Experian, one is called a Beacon Score, through Equifax, and the last is called an Empirica Score, which is through TransUnion.
Commonly, people refer to any of these scores as a FICO score or a Beacon Score.
I was incorrect about what FICO stands for. It is simply Fair Isaac COrporation.
At any rate, there are only Three bureaus, all which may be referred to as giving a FICO score. There is no one master score. Only three individual ones that are used to provide a middle score that the banks will use.
Does this make any sense?
Well no not yet. When I go to www.MYfico.com, I can pull all three reports from all three bureaus and I get three seperate but similar credit scores. When I pull it through privacy guard, I get three scores also but they are nowhere near what the FICO ones were, and if I pull through each individual creditbureau eg. www.experian.com I get yet another score., Thats why I am so confused
That is strange. I dont understand why there would be a large variance, unless there was a couple weeks time between each pull. All the information comes from the same place, you are just using different conduits to obtain that information. Did you check to see when the last action reported on each account was on each different credit pull? My only guess is one conduit is not as fresh as another.
Hello.
The scores that you receive from http://www.myfico.com are the scores the lenders will be looking at. Those scores are derived using the same mathematical model (created by Fair Isaac and Co.) based on information on each of the three credit bureaus.
Because each bureau can be reporting different information (due to some creditors only reporting to one bureau) or misinformation, the scores from FICO will vary.
When you log into say, Experian or Equifax, you get a whole new score to ponder. Since FICO does not divulge the "mathematical model" thats used to generate the scores, each of the bureaus have created their own models.
At http://www.creditboards.com we call these "manufactured" scores our FAKO scores, since they count to know one but the consumer.
So, if you want to know what scores lenders look at buy them from http://www.myfico.com but first get a discount code from http://www.creditboards.com
I can't make it any clearer than this.
Good Luck.[ Edited by diatribe on Date 04/02/2004 ]
Thank you diatribe! Enlightened me as well. I've never pulled credit through experian or equifax...probably because of the reason you speak of! the scores that I pull are for the banks...so this makes sense as to why I couldn't understand the discrepancy.
Ok! great info! and I have been to the creditboard site before but didn't see a thread like this. So you are saying that lenders are pulling the FICO score. IF that is the case then how come my lender is telling me that rate shopping is going to drop my score?
Multiple lenders pulling credit will drop the score. The reason is because it makes it look to a lender like you are going buck-wild trying to get loans and irresponsibly rack up debt. So the algorithyms in the credit scoring system drive your score down when people pull credit.
if you weren't already confused, here's another titbit.
my experian score according to my lender is 633(thats a 100 point drop in a 30 day period)
but according to experian site, my "plus score"(whatever that is) is 725. which i guess is worthless, but then why
show that to me when i buy my credit report????
I am familiar with the "plus score" I ran it for my wife. Not quite sure why the score would be different for the same company.
But then again, I'm not quite sure why any company can legally give joe-borrower their actual score.
For loan officers (and any other lender as far as I know) to give someone their score is [technically] not legal. That is why when I pull credit as an LO the bureau gives me an option for a "borrowers" credit report, which lacks a score.
Guess the "plus score" is some kinda hullaballoo that experian is trying to pawn off on people to make a buck.
Who knows?
Okay, so let me put this in my words, to see if I've got this right.
I, too, just pulled my report from www.myfico.com 1 week ago, then through www.privacyguard.com yesterday (because of the $1 special).
Myfico said my scores were 590, 600, 644.
CreditGuard said my scores were 578, 611, 622.
So, you're saying that since the bureaus don't give out the EXACT formula that they use, these sites that can do a soft pull for you are ESTIMATING your score based on what they think the formula is?
I'm also wondering why the MyFico report showed very little errors (3), but then PrivacyGuard showed me TONS of errors that need to be fixed (32 to be exact!!). Thank goodness I used PrivacyGuard, but I'm not clear on why they'd be so different. Both are reputable sites, correct?
Thanks,
Mike
Define reputable.
This is essentially a 3-way monopoly in collusion with the banking and mortgage brokering industry.
I suppose there is some weird "average" that might reflect some semblance of credit-worthiness.
I'd be inclined to say that it's more of an art than a science.
However, that is extremely insulting to "art".
Answer in simple terms:
MyFico has the accurate numbers. All others aren't worth the paper they're printed on.
Certain lenders in various fields use variations on the FICO model (Auto-enhanced beacon, etc.), but the typical "FICO" scoring model was designed for the mortgage industry, so I wouldn't worry too much about it here.
All other scores (PrivacyGuard, Jimmy's Super-Discount Score, etc) are worthless... INCLUDING those purchased directly from the big-3 that are non-FICO. I've seen gaps of 100pts between FICO and other models.
Generally, if someone refers to your middle score, Go to MyFico, and pick the one in the middle. Done deal.
Thanks. I appreciate it.
But, any idea about all of the extra mistakes reported through Privacy Guard... and the lack thereof from MyFico???
-M
Ignore Privacy Guard... those reports are good for one thing only...seeing whether any changes have happened... new tl appearing, one being deleted, etc.
There are all sorts of errors there. I almost made a huge mistake based on PG. When you get a tri-merge (from them or others) the information merges. In other words, if one of the CRA's doesn't have the account number, you'd know that if you ordered the report from them directly because it would say "account # not on file". However, looking at the same account on PG, it would list it with an account number because the tri-merge software looks at various pieces like the name of the creditor, the amount, dates, etc. If enough pieces match, they list it with the account number that corresponds to what the other CRA's have listed for that account, because it figures it's the same account.
Why would this matter... Because if you dispute this account with the CRA who DIDN'T have the account number, you wouldn't realize that you were giving them info they didn't even have which will then be used against you.
I can list several other reasons for the following statement, but suffice to say: DO NOT initiate a dispute based upon a report from ANY source other than the particular CRA in question. In fact, with EXP, I'd go even further... purchase it online, and go through the steps for an online dispute... you'll see information in their dispute area that was not on the "report". In my experiences, it's this dispute list that is most complete... this is what you want to look at when disputing addys, etc.
PG, etc. do NOT give complete addy listings. You are NOT seeing everything on your report... and the info is NOT guaranteed to be accurate. I have my doubts as to whether it would hold up in court for this reason as well.
By the way, what I'm saying goes for MyFico too. At least a couple of the CRA's will let you get a report WITH a true FICO number. This is the ONLY reason for using MyFICO... to get the accurate number. If you need to know your score, and you can't get a real FICO from the CRA, then goto MyFico...
Other than this purpose, though... do NOT use a report from MyFico to initiate disputes. It is going through a reseller, and as such is not guaranteed AND all of the tri-merge errors I just wrote about still apply. The software itself causes problems. Initiate a dispute ONLY from reports directly from the particular CRA being disputed.
However... if all you want to do is get your scores, and you want them to be accurate... MyFico is the way to go.[ Edited by thestudentisready on Date 05/25/2004 ]