The Problem with Consumer Credit Scores!

Consumers receive credit scores that don't match creditor accessed credit scores. That is all there is to it, the credit reporting agencies are just making money enticing consumers to buy products that they are inferior to what the lenders pull.

Even if a consumer got access to the same score as a lender it is just one of hundreds of possible scores used by lenders, getting an exact matching score to what the lender who accessed your report used is like finding a needle in a haystack, the odds are just very slim.

Each credit reporting agency has their own personalized scores. Experian uses FICO, Equifax uses Beacon, and TranUnion uses Emperica. These are just the more popular scores they sell, they have even more. They fine tune the scores and upgrade to new versions to promote for creditors to invest in. Every few years the models change.

Also the range is different than the consumer obtained scores. Some range from as low as 250 - 300 all the way up to 800 - 900. So knowing that how can a person fairly compare the difference between the credit scores used?

Also the brand name scores break down into industry models:

*Installment Loans

*Auto Loans

*Mortgage Loans

*Credit Union

*Credit Cards

*Personal Finance Loans

*Utility

*Rental

*Insurance

*Bankruptcy Risk

It just keeps going on and on, to explain more on this, each customized score focuses on the industry they are made for. For example a mortgage model is going to look at all of the past consumers who held mortgage loans, they are going to look at the statistics of the common, predictable credit behavior displayed by these types of customers. They are going to grade new customers against the stats and determine if they fit the stereo-type of the other mortgage loan holders.

The Bankruptcy Risk model looks at the stats of other people who have filed bankruptcy - they are going to try to pre-determine the risk behavior that led to a person filing bankruptcy. They are going to try to hedge off approving people who they pre-judge that might possibly file bankruptcy down the line.

Rental model will look at whether or not you paid all of your utility bills in the past; they know for a fact that when consumers fall behind on utilities that it is usually just a matter of time before they default on a rental agreement.

Knowing this, and how important approval and prime interest rates rely on these scores, a consumer can't just assume that the 680 score they see on their consumer credit report is good enough just because the lender they are trying to apply for tells them that 680 is the score they will approve at. Chances are when the lender pulls their own credit report the score they actually see will be lower. Then the consumer is all confused when they knew they had a 680 score. They don't realize that consumer scores can differ from 20 - 50 points off from lender scores.

Therefore, it is my advice, if you know you will be applying for new loan and a creditor tell you what the score is that you need to get to be approved at, then you work at actually increasing your score 20 - 50 points to offset the possible difference. This way you cover your bases and might hit the target score when you do apply.

Consumer credit scores are just a generic product, it can help you track your personal progress, but it is by no means reliable to just go out and be approved for a loan. So just be warned, not to put too much stock in the accuracy of your consumer credit score.