YFSCREDIT.COM – Day 3: Why Your Credit Score Will Always Be Different

Welcome back Wealth Builders! Ok before we dive into this lesson I need to reiterate how important it is to grab your $1 credit reports from the following link:

Everything that we do tomorrow is about specific sections of your credit report, so I’m giving you one more chance to catch up.

Make sure you download the reports as well or print them out before you cancel your account! You are going to need those reports.

With official business out of the way let’s talk about the elephant in the room…

Let’s talk about why credit scores are different between each credit bureau, credit monitoring place, and lender.

A day doesn’t go by when someone doesn’t ask…

Is 'insert XYZ' famous credit monitoring services that we get for FREE the actual credit score?
Where do I get my “real” score?
I applied for an auto loan, and my scores were different? Why?
My credit card pulled my credit, and my scores are different? Why?
Insert Random Place pulled my credit, and my scores are different? Why?
Why are my scores different on Equifax, Experian, and TransUnion?
I think I covered 95% of the credit score questions, but if I missed a few drop it in the facebook group.

Let’s get to the answer…

Credit scores are going to be different between the bureaus, banks, score models, and companies that provide you access to your credit score and credit reports.

Two things develop credit scores:

Your data at the credit bureau.
The algorithm used to score the data.

So, how come your credit scores never match from one provider to another?

First, the credit data that makes up the credit report at each of the three credit bureaus — Equifax, Experian, and TransUnion — are very likely to be different. (You’ll see this tomorrow when we go step by step through your credit report)

Second, the scoring algorithm that is applied to that credit data is also likely to be different.

Third, The date your credit report was pulled is different.

You can’t compare a credit report checked on the 1st day of the month to one reviewed on the 9th day of the month

By different, I mean the actual algorithm calculation will be different, such as using more or less weight to different categories.

For example, FICO says:

35% of your score is paying on time
30% of your score is total utilization or amounts owed
15% of your score is how long you had credit
10% of your score is types of credit
10% of your score is new credit or inquiries

The total is 100%, but some places put more weight on other areas to make up the 100%

Finally, the credit score range for your credit score may be different.

Some are 300 to 850, and some go 200 to 900, etc etc..

With all these differences, keep in mind one thing: all credit scores predict your ability to repay a loan. It’s an educated guess by the report provider on the chances of you defaulting on a specific type loan within 90 days.

If you monitor and trend your credit score at the same provider over time, the changes in your financial health will be revealed in your credit score regardless of what bureau, model, and range you use!

It’s like using the scale at your house, vs. the gym, vs. the doctor.

Sometimes they say different things, but if we continue to eat right and workout, we know that we will continue to reach our health goals.

Did you know this entire challenge is just one portion of my How To Fix Your Credit – DIY Program? Yup! I’m going to show you what’s possible if you had the right information! 

The same goes for credit scores.

You’re probably like ok, but why when I get an auto loan, credit card and mortgage from the same bank the scores are different?

The answer is simple. Each loan type has its own credit score formula.

I know I know it would be too much like right to just have one credit score to rule them all, but credit is a big business, and one way to get more money from the same clients is to sell them the same product in different ways.

Also, since big banks do not like change some divisions are purposely using older credit scoring models for mortgage lending vs credit card lending.

I can go on and on, but at the time of this challenge there are over 30+ FICO credit scoring models and depending on the bank, loan type and credit bureau they can all be used against you today!

For example, some scoring models by credit card companies put more emphasis on total utilization. Just know that for each loan type (auto, credit card, mortgage), there will be a different credit score algorithm!

I’ll include a link to the various FICO scores and models as a bonus video below.

I don’t want to be a broken record, but you cannot control the algorithm, you can only control your actions.

An overwhelmingly high percentage of every credit algorithm will be your ability to manage your finances, and I’m going to share with you my money management secrets in this challenge!

Now you know why your credit scores are different!

Oh BTW… If you do not have a credit score. No worries, the things we cover in this challenge will ensure you have one. Here are the minimum requirements to have a credit score per FICO guidelines:

  1. At least one account opened for six months or more, and
  2. At least one account that has been reported to the credit bureau within the past six months, and
  3. No indication of deceased on the credit report (Please note, if you share an account with another person this may affect you if the other account holder is reported deceased).
However, please please please if you have not received your credit reports yet get them now.

Here is the link:

Make sure you cancel 3 or 4 days after you get the credit reports, download them via PDF or Print them out.

Before you leave, can you do me a favor?

I want to make sure everyone that you know and love that needs help with their finances receives it…for free.

Here’s how you can help!

On your social media profiles (FB, Twitter, IG, etc.) create a post saying:

Today I learned why credit scores are always different. Take the FREE credit improvement challenge with me at YFScredit.com

 

Oh before I forget. Follow my social media pages! Just click the link below

See you tomorrow!

top