Is That Really My Credit Score?

I have been a big proponent of “freezing” credit to prevent fraud and identity theft as well as using AnnualCreditReport.com to check your credit report every 4 months. But, one of the things I dislike about credit bureaus is that when you complete the steps necessary to view your credit report, you are usually given an option to view your credit score. In fact, there are many different ways you can do a self-check of your credit score. But be aware! The credit score you are given is often not the score lenders use, and in fact may be an inflated score.

Most lenders use a credit score that is specific to that industry. Mortgage lenders use what is called a “tri-merged” report. This is a report that contains data and credit scores from all three of the big bureaus; Experian, Equifax, and TransUnion. These reports will contain a credit score obtained from Fair Isaac Company (FICO). The scores range from 300 to 850. Generally speaking, below 620 is considered poor credit, 620-680 is “C” credit, 680-720 is “B” credit and anything over 740 is “A” credit. One side note, home lenders also require a certain number of open trade lines. A person that has 800+ credit could actually be considered unlendable due to a lack of credit depth. So, don’t stress if your credit in not in the 800s because you have a few open credit lines. Open accounts are actually a good thing. Most A-rated borrowers are in the high 700s.

However, when you obtain your own credit score directly from a bureau, your credit card company, or most 3rd party credit score providers, what you actually get is a Vantage score. Vantage scores range from 501 to 990 and there is no direct conversion to a FICO score. So, be cautious! A Vantage score of 700 may sound good, but that may translate into a much lower FICO score. A Vantage score below 620 is considered poor credit, 620-700 is “C” credit, 700-760 is “B” credit, and anything over 760 is “A” credit.

The bottom line is that I would not waste money on buying a credit score. Free credit scores from credit card companies are fine for gauging where you stand. A more important task would be to check your credit report every 4 months at AnnualCreditReport.com and dispute any inaccuracies. If you need any help, let me know or read the blog post Credit Repair Made Easy for directions.