Why is my credit score not the same when it’s pulled from different places?
Many people are shocked and confused when they see their credit score from a particular source, and later notice that the score is completely different when pulled from somewhere else. Imagine that you’re diligently working to increase your credit scores by tracking them through a credit monitoring service, paying your bills on time, and keeping your credit card balances low. Then, you go to a dealer to buy a car, only to realize that your score is 50 points lower. Why is this? Shouldn’t these credit scores be the same? I mean, it’s being pulled from the same data and credit history, right?
Unfortunately the answer to that question is no. It is unlikely for those scores to be the same. In fact, you should not expect your scores to be the same when pulled from different places. If you obtain a consumer credit report directly from the credit bureaus (Experian, Equifax, TransUnion), and then simultaneously got your credit pulled at Wells Fargo Mortgage, Toyota Motor Credit, Capitol One Visa, and Bank of America, all of those scores will likely be different. They would probably be within a range of 10-40 points. However, if you had derogatory information on an account, like a late payment on a car loan, then the range could be even greater.
The first thing to understand is that the credit score is not actually for us, the consumers. It is actually for creditors and companies that offer credit. The credit scores give these companies a way to quickly assign risk when evaluating potential customers for new credit accounts.
In recent years, an entire industry has developed allowing us to pull our own credit report through a credit monitoring service. This service allows us to see the items are on our credit report and track our credit scores. However, the purpose of the credit report and the credit score remains the same. It is a mechanism that companies use to evaluate us for new credit accounts.
FICO, which stands for Fair Isaac Company, is the internal system behind credit scoring. It is a complex mathematical algorithm that uses the information on our credit report to calculate the three digit number that makes up the credit score. FICO has formulated different versions of their scoring model for different industries. The automobile industry will have a FICO scoring model that is different than that of the mortgage industry. The credit card industry has a different FICO scoring model then the one sold to the banking industry. Each industry has specific categories or account types that will receive greater focus, in an effort to determine a potential client’s credit risk for that industry For instance, if a person has been late on previous car loans, their FICO score will be lower when their credit report is pulled by a company in the automobile industry. That is the reason why the credit scores reflect differently when pulled from different places. Depending on the company and industry, the mathematical calculation of credit score will vary.
Let’s talk about the scores that you and I can obtain ourselves. There are two types of scores that we as consumers can access. We can get a true FICO score by obtaining a credit report directly from the three credit bureaus. Another option is get a “simulated” FICO score by using ANY credit monitoring service besides the credit bureaus themselves. In either case, the calculation of the credit score is a “vanilla” calculation WITHOUT any of the industry-specific score modifications. Anytime a company pulls your credit, they are getting a TRUE FICO score. However, even if we get a TRUE FICO score by going to Equifax, Experian or TransUnion, it will still be different because it is reflected without the industry-specific score modification.
Does this mean that the scores obtained from a credit monitoring service are useless? Absolutely not! Mainly because this is the ONLY score that we can get without a company pulling our credit and causing us to obtain a hard inquiry. After all, a hard inquiry hurts the credit score. Using a credit monitoring service to track your credit scores and view your credit report is just as effective as using a report from the credit bureaus.
All of this probably sounds confusing, but just remember that the credit score is NOT a static number like your social security number. It is simply the end result of a mathematical calculation that can and will vary, depending on who is initiating it and in what industry they are in.
– Tim Craig, CEO Max Score Credit