Mortgage Lender in Rochester MI Explains Why Credit Scores May Vary Between Different Reporting Companies

Have you ever wondered why there are several versions of your credit score? Maybe you obtained a free credit report only to find that your mortgage lender came up with a completely different score. How can this be?

This is because not all credit reporting companies will use the same credit scoring model. You may find that your FICO score varies from lender to lender or some reporting agencies, such as auto lenders do not even use the FICO scoring model.

One reason for the variety of credit scores is the Fair Isaac Corporation (creators of the FICO score) has updated their credit scoring model multiple times over the years. However, credit bureaus who purchase software from Fair Isaac are not always using the latest version of the software. So one mortgage lender could be using the latest version while another lender’s software is several years out of date.

Your credit score may also vary depending on what you are applying for. As mentioned, mortgage lenders use the FICO scoring model. But not all companies use FICO as a guide.

Auto Loans – Because auto lenders prioritize certain credit information, such as payment history, dealers have developed their own credit scoring models. For this reason, you may find a completely different version of your score than one provided by a mortgage lender.

Insurance Companies – Did you know that your credit score can impact your auto or homeowners insurance premium? Similar to car dealers, insurance companies will use their own scoring model and that model will vary between different insurance companies.

VantageScores – Certain occupations may require a certain credit score to obtain or keep your professional license.  In this case, the Vantage Scoring model is used. There are many similarities between the VantageScore and FICO credit-scoring models but each model may weigh certain factors differently. For example, VantageScore may be more forgiving on certain collections than FICO.

Free Credit Reports – You are entitled by law to one free credit report from Equifax, Experian and TransUnion every year. Even these 3 scores may vary significantly depending on the underlying data each bureau has gathered. Keep in mind these scores won’t be exactly what your mortgage lender sees when they run your credit. However, they will give you a general idea of where your credit score stands.

Additional Information

4 Credit Mistakes Michigan Homebuyers Make

Improving and Maintaining Your Credit Score for a Michigan Home Loan

Michigan FHA Loans Can Help Homebuyers with Less Than Perfect Credit

About Rochester Mortgage Lender, Julie Krumholz

Julie Krumholz is has been helping Michigan homebuyers for over 30 years and has several loan programs available to help people with lower credit scores or those that need down payment assistance.

She can also suggest ways to increase your credit score several points before even applying for a loan. Sometimes it just takes a few changes to increase it by 25 to 50 points. Julie is here to help you navigate through the entire process.

Call Julie from Superior National Bank today at: 586-382-5482.