Credit Secrets Revealed: Purchase Credit Score from the Right Place
In my interview with Judyth Piazza, founder of the Student Operated Press, I talked about how important it is to purchase a credit score from the right place. I wanted to share that interview with you (click on the link above) and make a few comments about the importance of where you purchase a credit score.
I keep seeing ads offering credit reports and credit scores, and I can understand why these offers might be alluring, especially now that the economy has taken a turn. But beware that you don’t purchase a credit score from the wrong place.
It’s a little confusing, but the process generally works like this:
The credit-scoring bureaus use a lot of different formula to generate a credit score. Based on who is asking for the credit score, they will apply a different formula. A lender who is considering whether to give you a car loan is interested in different aspects of your history than your landlord, so the formula will be tailored accordingly. For instance, greater emphasis might be placed on your installment payment history for the auto lender; the landlord’s score might place greater emphasis on your mortgage history.
When you pull your own credit report, the formula generates something called the “consumer score.” The consumer score is relatively generic. It places equal emphasis on your mortgage history, installment payment history, etcetera.
The problem with the consumer score, though, is that no lender will ever see it. Never. Not in a million years.
So the consumer score is worthless. Unfortunately, this is the score you will get if you purchase a credit score from most online sites.
To put this into perspective, I pulled my consumer score and my FICO score on the same day, just to see what would happen. I went to AnnualCreditReports.com and purchased my Experian, TransUnion, and Equifax consumer scores. All three reports showed a credit score above 720, the cutoff for receiving the best interest rates. In fact, my lowest credit score was 759.
This seems great, right? I can just go apply for a loan and get the best interest rate out there, right?
This is what a lot of people would have done, but I knew better about where to purchase a credit score. Through my mortgage company, I was able to purchase my Experian, TransUnion, and Equifax FICO scores. FICO is the score 90 percent of lenders use. This time, my highest credit score was 759. My lowest was 653—a whopping 67 points lower than needed to secure a loan at the best interest rate. A collection account had been added to my report (it was a mistake) and this one item was causing my score to drop significantly.
Imagine what would have happened if I had been preparing for a home loan and relied on AnnualCreditReport.com as an indicator of my credit score. I would have had two lousy options: 1) accept less-than-favorable loan terms; or 2) postpone purchasing my home while I clean up the mistake on my credit report.
This is the problem with most places you might go to purchase a credit score. If you want an accurate reflection of the credit score lenders will see, you must purchase a credit score from the right place. Go to www.720ficoscore.com to get the only score that matters: FICO.
Credit Secrets Revealed: Purchase Credit Score from the Right Place
