Does my bank use a different credit score than agencies report

Question

I have excellent credit > 800 when I get my score from the various credit agencies. I also get the same score on CreditKarma and on my credit card website.

However, I do have one closed collection account om report for $95. It was a medical bill that was sent to my old address after a hospital stay. I payed the bill when I finally found out it had been sent to collection. This account does not show up on CreditKarma.

Then I applied for a mortgage with a local bank, and they inform me that my credit score is ~680 to 700, thus resulting in higher interest rates.

From what I read I understand that collection accounts under $100 should be ignored on my score with the FICO08 calculations. I guess my question is; does mortgage lender user a different scoring method? Should I try a different lender to see if they offer a better rate?

Thanks for any insight.

Victor N. · Answer

@Jens Nielsen, Different lenders use different credit reporting agencies. For example, Bank of America uses TransUnion.

You should request your credit report and score from all 3 agencies ( TransUnion, Equifax, Experian) and compare them. Sometimes, they do not all have the same info and as a result their scores may vary widely.

Also, there is another reporting agency called Innovis that some companies use. So you should get a free copy of your report from them.

As others have mentioned, there are different Fico scores, but FICO08 is pretty reliable in telling you where you stand.

CreditKarma, is good. The only problem is that the score they give you is not a FICO score it's called Vantage and is not used buy credit issuing companies.

So with a little bit of research you can find out what's causing the discrepancy in your credit scores.

David Dachtera · Answer

@Jens Nielsen,

What most folks don't know is that you don't only have one credit score. You have as many scores as there are credit reporting agencies, credit scoring models (FICo, Vantage, etc.) and different situations where you might apply or a loan or for credit.

Home loan lenders will get a (set of) score(s) weighted toward home loans - mortgages, HELOCs, etc.

Auto loan lenders will get a (set of) score(s) weighted toward auto loans.

Credit Card companies will get a (set of) score(s) weighted toward unsecured revolving credit.

... and so on.

That is, you don't only have one score - you potentially have thousands.

Actually, to be the most accurate, you don't have any credit score at all - until the scoring calculations are run and a result is reported. Even then, it's a snapshot at that point in time and it expires almost immediately. Some could pull your credit again almost immediately - even for the same purpose using the same scoring model - and get a different result.

Sites like FreeCreditReport.com, CreditKarma.com, etc. are sponsored by - wait for it - YES! the people who issue credit cards! They'll paint you whatever rosy picture it takes to get you to apply for credit. They probably do NOT show your FICo score under any of FICo's models. They would have to subscribe to FICo, and that costs. They're mostly likely some variant of a Vantage score.

I would recommend MyFICo, personally, although TruCredit has the advantage that it shows when your various accounts report. Changes coming in the credit industry this summer will render that less valuable than it is currently, however.

David J Dachtera

"Success is not a destination. Failure is not an event. Success is a process, failure is a choice."- DJ Benedict

Chris Mason · Answer

FICO itself has a zillion different scoring algorithms. Landlords and car lenders and mortgage lenders and cell phone companies all use different algorithms that FICO has developed, will look at the same data from the same credit reporting agencies, and FICO will spit out a different number depending on what business the person pulling is in.

You could pull credit for a potential tenant as a landlord and get 780, then they walk into my office and we get 675.

It can go the other way too -- someone with a long history of lots of car leases and car loans, always paid on time, but with a spotty credit card bill payment history, could very have a higher credit score when I pull their credit as a lender because their secured debt credit history is far more solid than their unsecured, and mortgages are secured debt.