My Credit Scores... Huh?

[lemmyk]

I've been a subscriber to of the major credit reporting websites for a couple of months now as I like to monitor my score/report on a regular basis. For $15 a month, it's almost a no-brainer... Especially since my employer pays for 1/2 (they have a relationship with them...).

Anyhoo... my question is on the scoring systems... I know in general how they work (payment history, available credit, outstanding credit, inquiries, etc...).

I get an actual score (daily) from the three major agencies. My scores (as of today) are:

Equifax: 707
Transunion: 734
Experian: 659

I recently refinanced my house (last month). In the paperwork I received, they stated that my FICO was ~750 - which is higher than the highest score I've received.

I've been checking my scores pretty much daily for the last few months (since about October), and my score has never been that high (as the reported FICO).

My actual questions:

1. Why is there SO MUCH of a difference between my Experian and TransUnion scores (about 80 points)?
2. Why is my FICO so much higher than any of my other scores.
3. What is my real score?

Thanks in advance!

[anonymous_saver]

Can I ask why you would need to check your scores daily and why you would pay $7.50/month for this? Besides the refinancing, are you planning on getting any new loans? If not, I would drop this service. There is no use to knowing your FICO score if you are not getting a new loan in the new future.

Also, as far as your FICO score being 750, that was probably taken before your refinance, so your scores likely lowered after the loan/refinance.

I know this isn't exactly answering your questions, they were just some thoughts I had.

(1) The scores are different b/c differnt agencies calculate the scores differently. Also, are you sure all of your information is correct at all of the credit unions, sometimes they have different information which will show up in your score calculation.

(2) Your FICO score is the same thing as one of your scores. Your mortgage company just got one of the scores most likely and used that one, it may even be on your paper work. For example, my credit union only looks at Equifax's #'s.

(3) As the smiley face suggests, these are all your "real" scores. At the moment you look at them that is.

Good luck!

[lemmyk]

Thanks for the reply.

To answer your questions...

I have this service due to the fact that an HR employee had her laptop stolen. Our company provided this service to us to monitor our credit for identity theft. They gave it to us for free for the first year, and is paying for 1/2 now that the free year is up.

This service doesn't just show scores, it is a complete credit monitoring service which includes account information, inquiries, creditor information, etc...

I check daily because I am anal

As far as scores (FICO), in the last several months my score has never been over the 734 I have from TransUnion, which makes me believe that FICO is something altogether different than what I am seeing.

And as far as my refi lowering my score, it actually seemed to have little or no affect on my scores. Actually, it's kinda fun watching my score inch up every once in a while. Last year this time I was mostly in the mid-high 600's.

Thanks!

[InDebtInDC]

This service doesn't just show scores, it is a complete credit monitoring service which includes account information, inquiries, creditor information, etc...

This is the best you can do. All you can do is check and verify that all of your information is correct.

Your credit report contains thousands of variables. Each company will apply their own algorithm to generate a score based on their own idea of what they want to see. The same company will even apply different algorithms to your credit report based on the type of business they want to do with you.

The goal of the credit report is to store all of your financial transactions. The purpose of the credit score is to predict how much a company can benefit from you based on the type of business they want to do with you.


The score themselves are meaningless. When a company looks at your credit report and tries to determine if they should do business with you, whatever that business is, they have patterns of behavior they want to see in their customers and clients. The patterns are different depending upon the type of business.

For example, credit card companies like people who usually overspend a little bit so they can increase your interest rate and charge you late fees. Mortgage lenders like to see that you either can pay the loan off, or if you can't, they want to be able to make some money from a foreclosure. Car manufacturers just want to sell cars, so they'll gamble and offer lower rates to people with questionable credit just to clear the cars off the lot. Even if you can't pay off your car they can still repo and sell it used. At least they don't lose as much money as a car sitting on the lot, and they do make money on the loan.

Insurance companies want to see responsible people so they can lower payouts. Employers want to see responsible spending so you're not stressed out because of money, or if you have weird spending patterns that can suggest impropriety. Government jobs usually require a financial background check to screen for these things.

As you can see, each type of business has its own preference. Each company has their own proprietary algorithm that they apply to your raw credit report.


Don't worry about it. I would not check my credit score every day; however, I would monitor your credit report regularly to make sure that nothing is wrong. If something is wrong, get on them and make them fix it

Good job trying to be responsible. Just don't be paranoid

[vsjhoc]

InDebtInDC - great post!

[disneysteve]

My scores (as of today) are:

Equifax: 707
Transunion: 734
Experian: 659

I recently refinanced my house (last month). In the paperwork I received, they stated that my FICO was ~750 - which is higher than the highest score I've received.

Are you sure that the scores you are getting from the 3 companies are actually FICO scores? I know they also have their own scoring system which doesn't totally match the FICO scoring system. That could explain the difference.

[jIM_Ohio]

First- my score is higher than yours, did I win anything?
Second my wife's score is lower than yours- did you win anything?

Credit scores only matter if you need to tap credit. You got dinged a few points because you probably had mass inquiries when you refinanced, and over time (6 months) you should see scores rise.

I have not checked my credit since we refinanced last spring. I would not worry about identity theft unless you are using credit quite a bit (like using your cards everyday, or purchasing things online).

I would worry more about cash flow and household budget, and then worry more about saving enough, then worry more about interest rates on mortgage before I worried everyday about a credit score.

If you have a credit score of 775 with little savings and I have $500,000 in the bank, but a score of 650, which situation is better? If I had to take some credit risks to get the 500k, then the risks are worth the lower score.

The risks taken might be not using credit at all.

[Seeker]

First- my score is higher than yours, did I win anything?
Second my wife's score is lower than yours- did you win anything?

Credit scores only matter if you need to tap credit. You got dinged a few points because you probably had mass inquiries when you refinanced, and over time (6 months) you should see scores rise.

I have not checked my credit since we refinanced last spring. I would not worry about identity theft unless you are using credit quite a bit (like using your cards everyday, or purchasing things online).
I would worry more about cash flow and household budget, and then worry more about saving enough, then worry more about interest rates on mortgage before I worried everyday about a credit score.

If you have a credit score of 775 with little savings and I have $500,000 in the bank, but a score of 650, which situation is better? If I had to take some credit risks to get the 500k, then the risks are worth the lower score.

The risks taken might be not using credit at all.

No contentions with any of this except the part bolded above.

I've had problems with "Identity Theft" three times in the past 5 years. I have not purchased anything online in years.... probably 7 years or later. However, several times I've gotten calls from the Security Department of my CC company.

Once for airline tickets ordered online (not mine); another for some major household applicances that we're ordered online (some 100 miles from where I live), and I don't remember the oldest situation's details. Each time the CC company called me and each time my CC company gave me a new account/card to operate with. I have never lost my wallet and I do consider myself responsible with the card; in fact, it's never out of my sight.

DH on the other hand has had no problems, same account. And when we do go to a restaurant, it's his card that is out-of-sight for a brief time (so when they replace my card, he has to get a new one too).

Basically what I'm trying to say here, is that I monitor my credit reports yearly (through the free website), and I rely on the CC company to inform me of unusual charges. They have already told me that they monitor user's spending habits, and when something unusual comes up, it automatically pops into their systems. They give a call and I can "yes" or "no" it as mine.

Check your credit reports. The number (score) does not matter, but check for mistakes.... that's the only real thing you need to "be paranoid" about.

[Seeker]

I have this service due to the fact that an HR employee had her laptop stolen. Our company provided this service to us to monitor our credit for identity theft. They gave it to us for free for the first year, and is paying for 1/2 now that the free year is up.

And regarding this.... unless there are special circumstances not written here.... most thieves would not be interested in the data on the laptop. They are not going to spend the hours of time trying to get a password and hack the data from it. They want the laptop for it's resale value.

[disneysteve]

I would not worry about identity theft unless you are using credit quite a bit (like using your cards everyday, or purchasing things online).

No contentions with any of this except the part bolded above..

I agree, Seeker. I do use credit regularly but the one time I was a victim of fraud it was on an inactive credit account that hadn't been used for a couple of years. I knew something was wrong right away when I got a bill on that account since I hadn't used it for so long. There was one charge that was fraudulent.

I also agree that there is no reason to monitor your credit daily. You can get 3 free reports each year, one from each company. That means that for free, you can check your credit once every 4 months. That should be more than adequate for almost everyone. Spending $7.50/month just seems a waste.

[MonkeyMama]

Amen to Seeker. I did everything right and had my identity stolen last year.

I still have no idea where the breach of info came from. But when I started thinking about WHO had all my personal information. Schools, employers, financial institutions, etc., etc., etc.

Likewise, since I am a tax preparer, I EASILY can see how that info can be stolen. All it takes is one rogue employee who has access to hundreds of individual's personal data. (Which is usually the case when there is a security breech).

Anyway, in my case the thieves opened 7 accounts in my name and made off with $30k in merchandise in the course of 2 days.

Of course the worst is now 7 credit card companies I have never done business with have all my personal information. I heard one of them just had a privacy breach and lost some data. So it becomes a VICIOUS cycle.

I have since decided checking my credit once every 4 months for free is not nearly enough. The only saving grace is the thieves used my real address and phone # so I found out immediately and was able to do damage control pretty fast. If you find out months or years later it becomes a real nightmare.

HAivng been there, I'd say the $7.50/month is well worth it.

[pfodyssey]

For the average person, I think it's ridiculous that anyone would pay money for their credit report. The ones available via annualcreditreport.com should be sufficient.

As monkeymama mentioned, they racked up $30K in two days. If they get you, you aren't going to be able to stop them until the damage is done (you are insane if you are going to check it every day). Unless you are spending that kind of money regularly, the credit card company will be wise to it very quickly. In fact, I'm astounded it got that far (monkeymama must be loaded...nice). If the amount of money is anything significant, the idea that you wouldn't find out for years borders on absurd, months is probably a bit rare?

Common sense tells me:

A) Be prudent with my personal information (SS#, CC#, etc)
B) Monitor your credit via your free credit reports a few times a year (max)
C) Have some assurance that the credit cards are out there policing this stuff...they won't be perfect, but they'll likely notice it before I do (and is in their financial interest to do so)

[InDebtInDC]

I agree, Seeker. I do use credit regularly but the one time I was a victim of fraud it was on an inactive credit account that hadn't been used for a couple of years. I knew something was wrong right away when I got a bill on that account since I hadn't used it for so long. There was one charge that was fraudulent.

I also agree that there is no reason to monitor your credit daily. You can get 3 free reports each year, one from each company. That means that for free, you can check your credit once every 4 months. That should be more than adequate for almost everyone. Spending $7.50/month just seems a waste.

I agree with this. I was the victim of not identity theft, but of ineptitude on the part of the credit bureau and the lender. They had the incorrect social security number on a loan, and instead of contact the lender and borrower to correct the error, they parked the account on my credit report instead of putting it on the correct person's report. They left it up to me to fix my own report instead of being proactive in matching accounts with people.

In my case it was a house in Florida (I've never been to Florida). The borrower was making timely payment and the account was legitimate. The lender somehow transposed the social when they reported the account to the credit bureau.

It goes to show you that these companies do not have your best interest at heart. They would rather have a questionable account placed in your name and let you go through the dispute process. They would rather err on the side of caution than to let an account go unreported.

I would agree to be prudent in checking your report, but don't be paranoid and check it every day. If you have to, place a hold on your profile to stop new accounts from being opened without verification.

C) Have some assurance that the credit cards are out there policing this stuff...they won't be perfect, but they'll likely notice it before I do (and is in their financial interest to do so)

I would strongly disagree with this for the reason stated above. Never ever assume that any company will do something for you in your best interest, even if it's also in the company's best interest. They really have no authority to police your credit report unless they are the ones who reported the incorrect information, in which case good luck getting to admit fault.

[disneysteve]

In my case it was a house in Florida (I've never been to Florida). The borrower was making timely payment and the account was legitimate. The lender somehow transposed the social when they reported the account to the credit bureau.

Not credit related, but that reminds me of the time I got a parking ticket in the mail for being illegally parked somewhere in Pittsburgh. Of course, I was a student in Philadelphia at the time, 300 miles away. Apparently, the cop wrote down the license number wrong so the ticket came to me instead of the person who actually had the violation. I had to have the registrar of the college write a letter verifying that I was, in fact, in attendance at school in Philadelphia at the time. Plus, the car description on the ticket didn't match my vehicle at all.

The point is they can make the mistake and you are left to clean up the mess.

[InDebtInDC]

Not credit related, but that reminds me of the time I got a parking ticket in the mail for being illegally parked somewhere in Pittsburgh. Of course, I was a student in Philadelphia at the time, 300 miles away. Apparently, the cop wrote down the license number wrong so the ticket came to me instead of the person who actually had the violation. I had to have the registrar of the college write a letter verifying that I was, in fact, in attendance at school in Philadelphia at the time. Plus, the car description on the ticket didn't match my vehicle at all.

The point is they can make the mistake and you are left to clean up the mess.

Unfortunately that's the way the system works. The burden is on you to correct the error. Then the burden is (should be?) put back on them to prove you wrong and that what they did was correct.

In court you see this all the time, where if the opposing counsel doesn't challenge something that was said, the thing goes down on record as unopposed, and presumed to be valid. That's why you see lawyers throw out every kind of bogus arguments. Because if you don't respond to every one of those bogus arguments, even just to say that they're bogus, the argument sticks and is admitted as fact in evidence.

Lawyers know this. That's why they hit you with a barrage of irrelevant questions.

Just be aware. That's all you can do.