We hear that often along with the question “Why are they so different than what the lender shows?” The simple answer is actually a question. What scoring model was used?
Fair, Isaac and Company (FICO) is a publicly traded company that provides analytics and risk based scoring including credit scoring. This is a widely accepted scoring model and plays a huge part in a lenders decision making, but it is not the only one available when checking your credit. VantageScore was developed by the three major credit bureaus to assist in lender decision making and is also available to consumers on some sites. . There are other scoring models that are used primarily for educational purposes and not for risk assessment including PlusScore, TransRisk, and Equifax Credit Score. They are available through different providers as a consumer pulled report and tend to reflect scores higher than FICo or Vantage and are not used for loan decision making.
One last scoring model worth mentioning is CreditXpert. This is also an educational score, but is used to help determine score increases based on different scenarios. Many lenders will use CreditXpert to guide consumers in paying down or off certain accounts when their scores are borderline. however there can be assumptions in CreditXpert indicating an account must be removed. Sometimes this is easier said than done if the proper procedures are not followed.
Here are the score ranges for some of the non-FICO scores:
- PLUS Score – 330-830
- TransRisk Score – 100-900
- Equifax Credit Score – 280 – 850
- VantageScore 1.0 and 2.0 – 501 – 990
- VantageScore 3.0 – 300 – 850
- CreditXpert – 350-850
- CE Credit Score – 350 – 850
If you find yourself looking at a report with good or fair scores and the lender is telling you they cannot issue a pre-approval, this could be why. Reviewing your credit report and understanding what needs to be done is very important. If you have a question about credit, let us know and we will answer it.