Personal Finance

Why 4 websites give you 4 different credit scores — and none is the number most lenders actually see

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  • Oct 25th, 2019 4:17 pm
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Why 4 websites give you 4 different credit scores — and none is the number most lenders actually see

Why 4 websites give you 4 different credit scores — and none is the number most lenders actually see | CBC News
The most popular credit score that lenders use in Canada can’t be accessed directly by consumers... a Marketplace investigation has found that the same consumer is likely to get significantly different credit scores from different websites — and chances are none of those scores actually matches the one lenders consult when deciding your financial fate.
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Jul 16, 2012
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Very interesting but very sad at the same time. Why is it so hard to access my own information...
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Jan 21, 2018
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Should be on the Marketplace TV segment tonight, as they teased last week.

I've never looked at my credit score, and I guess I'm lucky that it's never been an issue. I just use credit when necessary and always pay my bills on time, and I've never been turned down for a loan or a credit card. I don't worry about the factors that supposedly affect your score like opening a new bank account or closing an old credit card. I know from the clues I've seen occasionally that outfits like Equifax and Transunion have inaccurate and incomplete information about me, but it's never been enough of an annoyance to make me want to have anything to do with them.

I feel for the people who need credit for something like a mortgage or starting a business, and have to deal with these clowns.
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Apr 16, 2007
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This is good, now everyone stop printing these educational scores and going into the branches expecting to get a credit approval.

Furthermore, every credit product applied for contains a number of risk factors that determine the overall score and they can all be affected by various supplementary indexes.
If you visit one bank and apply for a mortgage, revolving credit acct or secured auto all three will have different scores because each credit product scores risk differently.
As an example, personal lines of credit ranks risk scoring a lot higher than secured automotive. Both will have totally different score results by the FI and we don't care what these frees score sites give you.
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mikeymike1 wrote: This is good, now everyone stop printing these educational scores and going into the branches expecting to get a credit approval.

Furthermore, every credit product applied for contains a number of risk factors that determine the overall score and they can all be affected by various supplementary indexes.
If you visit one bank and apply for a mortgage, revolving credit acct or secured auto all three will have different scores because each credit product scores risk differently.
As an example, personal lines of credit ranks risk scoring a lot higher than secured automotive. Both will have totally different score results by the FI and we don't care what these frees score sites give you.
Yes we all know that all banks also add their own criteria on top of the FICO score.

It's still not an excuse for Equifax, Transunion and others to mislead consumers.
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May 12, 2014
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CiviCity wrote: Very interesting but very sad at the same time. Why is it so hard to access my own information...
Because it's not really your information. It's someone else's opinion of your likelihood to pay back something, which they come to after lots of work on a secret algorithm.

I'm also not entitled to know what my friends and neighbors say about me.
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Mar 16, 2011
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FrancisBacon wrote: Because it's not really your information. It's someone else's opinion of your likelihood to pay back something, which they come to after lots of work on a secret algorithm.

I'm also not entitled to know what my friends and neighbors say about me.
But what if they use that info to discriminate you for services?
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chopperE wrote: But what if they use that info to discriminate you for services?
But "they" don't. They just provide information to the mortgage lender or car dealership or whatever you are actually dealing with directly, and that's who makes the decision to discriminate against you. If you don't like it, go elsewhere and find a lender who makes their own decisions instead of relying on somebody else's unreliable algorithm. Eventually the lenders who rely on bad information and unreliable ratings provided by careless information dealers will get the message that they are costing themselves business and they will smarten up.
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Jul 16, 2012
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FrancisBacon wrote:
Because it's not really your information. It's someone else's opinion of your likelihood to pay back something, which they come to after lots of work on a secret algorithm.

I'm also not entitled to know what my friends and neighbors say about me.
Maybe its not my information but it is allowed me or blocking me from moving in my life (ie leasing a car or buying a house)

chopperE wrote: But what if they use that info to discriminate you for services?
Exactly my thoughts.
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May 16, 2017
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What people should be concerned about is not so much the absolute number of all these various credit scores but whether they are:
- in what general category (poor, fair, good, excellent),
- general trend over time (getting better, getting worse, stable),
- sudden changes (your credit mistake, or a sign of fraud)
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Jan 15, 2017
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No surprises in the article to any of us that work in the industry. All these free scores are essentially useless metrics.
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CiviCity wrote: Maybe its not my information but it is allowed me or blocking me from moving in my life (ie leasing a car or buying a house)
Agreed. People go into debt for different reasons. Not everyone has a spending problem. If the lender sees there is genuine concern for the person wanting to eliminate their debt, an automated computer algorithm shouldn't be the deciding factor as to how much money they can lend you.
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Sep 2, 2009
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One of the reasons my scores are not higher: "lack of mortgage". Being mortgage-free means I am less credit-worthy? Get out! Sure, a mortgage "implies" an asset that can be gone after in case of default and can build a history of "pay the credit back on time" but it is balanced out by higher ongoing payments and years upon years of other credit history.)

The article mainly bothered me for one main reason: the two free scores were beside each other and the two paid scores were beside each other. The two "Equifax" scores and the two "TransUnion" scores should be together.
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chopperE wrote: But what if they use that info to discriminate you for services?
Lenders, like all of us, are allowed to discriminate on any non protected ground. (Eg Skin colour is a protected ground, habits of paying off loans is not.)

You do not have a "right to forcing people to lend you money".

If you we're going to lend your money to someone, wouldn't you want to know their payment habits?
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cloak wrote: One of the reasons my scores are not higher: "lack of mortgage". Being mortgage-free means I am less credit-worthy? Get out!
No. It just means that statistically people without a mortgage track record default more often than those with a long track record.

Not every smoker will get cancer. In fact, most smokers will NOT die of cancer. But insurance companies use statistics to set prices. And lenders use statistics too.
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Jan 20, 2016
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Poutinesauce wrote: It should be required by law for credit agencies to give consumers nothing but the exact same score they give to banks and other lending institutions.
You do know that many "free" websites quite often uses Vantage formula instead of FICO?
And you do know that FICO itself has about several different "general" versions AND subformulas like credit card score, auto lending score, mortgage etc?

Which of those you want to have?

P.s. In USA many lenders use Experian as a third credit bureau besides TU/EQ. You can get "general" FICO for free (as we ll as at some banks) and other flavors for fee.
In most cases what I see in Experian, is the same as lenders (credit cards) are seeing as they send me the score they used when processing my request.

However, the mortgage lender do see DIFFERENT score from "generic" as they use DIFFERENT formula of it.

Creditcarma, Borrowel are quite useless, either in Canada or USA. Because they do NOT use FICO as lenders are. They can give you the general indication what your CS is about, but quite often are very off the mark. In my case it was 60-80 points.

P.s. FICO has 56 variants, you want them all for free by law? ;)
https://www.bankrate.com/finance/credit ... -have.aspx
Equifax TransUnion Experian Total
General: 6 7 6 19*
Auto: 3 4 3 10
Mortgage: 1 1 1 3
Credit card: 3 4 3 10
Installment loan: 2 3 2 7
Personal finance: 2 3 2 7
Total: 17 22 17
Grand total:
56
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FrancisBacon wrote: No. It just means that statistically people without a mortgage track record default more often than those with a long track record.

Not every smoker will get cancer. In fact, most smokers will NOT die of cancer. But insurance companies use statistics to set prices. And lenders use statistics too.
I get that statistically it might make sense, but not in the real world - which is why I included the part about a long history of paying. In my case, getting a new mortgage would make it harder to pay the bills as utilization would go up and cash flow would go down (not that it would actually change whether or not I would pay my bills). Defaulting on my current bills/credit products actual goes up by getting a new mortgage but it is advertised that I should get a mortgage to improve my credit score (supports that credit scores, after a certain point, no longer make sense).

To put it another -poorly worded- way, it would be like saying I should start smoking and then quit in order to show a lower odds of me getting lung cancer. (never smoking / being mortgage-free = very very low odds of lung cancer/default, start smoking / mortgage to "prove" my ability to quit)
[OP]
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robsaw wrote: What people should be concerned about is not so much the absolute number of all these various credit scores but whether they are:
- in what general category (poor, fair, good, excellent),..
And yet one guy had four different ratings ranging from poor to very good. Same person. Four different general categories. Go figure...
One of the participants was Raman Agarwal, a 58-year-old small business owner from Ottawa, who says he pays his bills on time and has little debt.

Canadian company Borrowell's site said he had a "below average" credit score of 637. On Credit Karma, his score of 762 was labelled "very good."

As for the paid sites, Equifax provided a "good" score of 684, while TransUnion said his 686 score was "poor."

Agarwal was surprised by the inconsistent results.

"That's so strange, because the scoring should be based on the same principles," he said. "I don't know why there's a confusion like that."
How does one interpret that?
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