Ok, I've had it!
During the years of refinance mania early 2000's I worked for a mortgage brokerage that was approved with 52 different lenders. This was wonderful for borrowers, giving them many options. But that was not the problem. Having all those lenders gave us opportunity to notice an inconsistency in credit report scores.

Before the end of the subprime era and before "lender implosion", we were noticing different lenders credit reports would give higher credit scores than others. Thinking this odd we began to pay attention, and yes, it was happening. After several brief inquiries we were told all lenders may not be using the same software, the same credit reporting model. Please understand I am not an investigator so I can not verify these suspicions but this seemed "off" at best. 

The problem is, it is still happening today and now I can verify at least one worrisome inconsistency. All credit reporting agencies scoring systems are not the same - they are not consistent in score numbers and that hurts you, the consumer!

I have been working with a family for several months, teaching them the in's and out's of  how to tweak their credit scores. I want to help them (you) get the very best mortgage interest rate they can. They were methodical and relentless in pursuing creditors and resolving credit issues. They even signed up with the (paid service) credit report monitoring option at www.freecreditreport.com to track their progress. And finally, the scores went from the mid 600's to over 720. Perfect for great mortgage rates. They thought they were ready to refinance and take advantage of today's great rates.


Note: lenders throw out the high and low scores and work with the middle number. Lenders use the above reporting bureaus too.

BUT THEN we pulled their credit report through the lender's system.  NOT FAIR AND YOU NEED TO KNOW, their working credit score (the lowest mid score of all borrowers) was 699 (not 720+) according to the lender's report. One point too low for the good rates.

I want to know what happened to the 20+ points? Why does Free Credit Report .com report higher numbers than the lender's report?

What a let down! These borrowers worked hard repairing their credit and were thrilled to see scores over 720. But then, me, now the bad guy, had to let the air out of their bubble. And how do you explain something like this to the borrower? How do you explain the lender does it different?

Here are some of the answers. A credit score number is derived from a formula based on an individual's creditworthiness and on credit report data provided by one of the three major credit bureaus: Experian, TransUnion, and Equifax. There are different methods of calculating credit scores. FICO, the most widely known type of credit score, is a credit score developed and patented by Fair Isaac Corporation. FICO scores are used by many lenders and financial institutions.

The credit bureaus all have their own credit scores: Equifax has ScorePower; Experian has PLUS score; and TransUnion has  TransRisk score. Each bureau also sells the VantageScore credit score. In addition, many large lenders, including the major credit card issuers, have developed their own proprietary scoring models to measure consumers' credit worthiness.

And that's just the tip of the iceberg. As more and more creditors depend on scoring systems to assess your credit worthiness, more and more scoreing models are being developed and used. Your car insurance and home owners insurance reflect an annual premium based on your "number" from their insurance scoring model, per my insurance agent.

The credit scoring practices are not consistent and that hurts you, me, everybody! How can we count on the information we get?
 
I have not been on a soap box before in my writing but I ask you to please comment. This issue needs to be presented to our government officials. The credit reporting system(s) need consistency, perhaps even regulation. We need to be able to rely, within a reasonable margin, where we stand. I find a 20+ point variation to be misleading and outside of an acceptable "couple of points" variation.

Join me in bringing this issue to the public eye. We need to fight for consistent reporting practices, your money depends on it!

Contact us at marcia@minocquamortgage.com or www.minocquamortgage.com for more information. And thank you for listening.