Credit Scores Are Not Real

Consumer Credit Scores Are Not Actual Credit Scores

This is what the three main credit bureaus don’t want you to know. Consumer credit scores that you can buy are not actual scores. These are consumer products that use a different score than what your lenders see.

Equifax, Experian and TransUnion collect credit information about you from your creditors. Your creditors report information to these three main credit bureaus so that it becomes part of your credit history. Then it is up to each credit bureau to assign a credit score for you using a complex algorithm. This formula is used to calculate a score based on items in your credit record that are weighed differently. Some items may have a positive effect, while others a negative impact on your score.

Each credit bureau uses separate formulas based in part on the Fair Isaac Risk Model developed by Fair Isaac Corporation. Experian and TransUnion have altered this model substantially however. This is widely advertised by each bureau so that you will still have a desire to purchase credit scores from all three bureaus. What they do not tell you is that the formula used for the consumer credit score that you purchase is different than the one that lenders see when they pull your credit. These scores also have different names.

To prove this, I requested an Equifax Score Power credit report hours before purchasing a car. The dealer pulled my Equifax BEACON Score and it was a full fifteen points lower than my Score Power score. Both were provided by Equifax based on identical credit information.

The bottom line is that each bureau supplies one version of your credit score to lenders and a separate version to consumers. Equifax provides you with a Score Power score and lenders get a BEACON score. Experian has the PLUS Score for consumers and Experian/Fair Isaac Risk Model score for lenders. TransUnion offers a TransRisk New Account Credit Score that differs from the Classic FICO Risk Score. TransUnion’s fine print states that “the credit score provided here is not a so-called FICO score.” It is buried within a lengthy disclosure about its products. All three have similar disclosures that explain that their consumer product scores are not actual credit scores.

VantageScore

These same credit bureaus added an additional scoring model in 2006. VantageScore actually uses the same formula for all three credit bureau reports. Still, your scores could vary because few consumers have identical information reported to all three credit bureaus. VantageScore is an additional model that may replace some of the other scoring models. However, it will not change the fact that you still are unable to purchase your actual credit score as seen by lenders.

This does not mean that you should necessarily avoid these consumer products. Pulling your consumer score can be helpful if you are trying to improve your credit, eliminate credit card debt or plan for a big purchase. Just be aware that your consumer score is only an indicator of what your actual credit score is.

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