A new government report found the credit score you see may not be the same score lenders are seeing when they pull your credit report.
According to a study from the Consumer Financial Protection Bureau, one in five businesses are likely to receive a score that is extremely different from the score used by a lender to make a credit decision.
The confusion apparently comes because lenders and businesses get their information from different sources.
Most lenders look at any one of 49 different FICO scores when deciding whether to make a loan.
Remember, your business also has a credit score. The score you get when you pay for a FICO score may or may not be the same score used by the lender. The FICO score is calculated from several pieces of credit data in your credit report.
While the number of businesses whose scores vary by large margins is relatively low, those that differ may have a big impact.
If you believe your scores are higher than they really are, and you apply for loans, you may not qualify. On the opposite end, if you think your score is too low, you might settle for higher interest rates or worse terms.
Shop around when applying for credit cards or loans and be familiar with your FICO credit score.
Your credit score and credit report are key tools that measure your financial risk, giving lenders a way to predict how likely you are to pay your bills on time. Many lenders — and others — use your credit score to help determine whether or not to give you a line of credit, whether you're applying for a credit card, buying a car or planning to buy a home.
The higher the score, the lower the risk — and the more favorable account terms you’ll usually be offered.
Remember:
Æ Check your credit score at least once a year. You can order your score from any of the legitimate services for a modest fee. The main providers are Equifax, Experian, Trans-Union and FICO (Fair Isaac Corp.).
Æ Check your credit report at least once a year. Credit reports may contain errors that negatively affect you.
If you see anything inaccurate in your credit report, write to the company to request a correction. A new federal law now guarantees all Americans a free credit report once a year. Also, you can request a free credit report from any of the three providers if you have been denied a job, insurance or credit, or if you have been a victim of identity theft.
Æ Beware of scams. Look out for companies offering “free credit reports” that are not really free services or that could be scams. Don’t give personal information to unfamiliar companies that contact you. Don’t enter into purchase agreements with companies offering to finance expensive products, where the cost can depend on your credit score.
Robb Hicken, Chief storyteller for the Better Business Bureau serving the Snake River Region rhicken@boise.bbb.org, 947-2115
