Recently, I began a refinance transaction for some friends. We talked about their credit score and they told me that they had just pulled one and their score was 720. The score I saw was not the same.
As you all are aware, there are three different bureaus that score us for credit scores – – Experian, TransUnion, and Equifax. FICO is the scoring model that has been used by all three companies since 1956. It is a score-driven model that grades on past history of credit usage. When a score is pulled the three figures may not always be the same but they are relatively similar. The scoring is based upon information that has been provided to the bureaus.
Many of you who are past clients know that mortgage professionals pull what’s called a ‘tri-merge’. A tri-merge is a third party company; I use a company called Credco. They pull from all three bureaus and merge the information into one report for ease of explanation and understanding for the consumer, the mortgage guy and the underwriter. The information that each bureau used and their scores are all printed on one report which enables me to see if all three bureaus picked up the same information. If they did not, it explains the difference in scoring. These companies have created their own scoring system (‘consumer scores’) which enables them to avoid the cost associated with using the FICO model. The FICO model is very secret and is not disclosed to either the bureaus or the general public without payment which enables it to remain the dominant leader in the market.
The difference in the number I see and the one clients pull up on their own is confusing to everyone. It’s a glitch in the system that needs to be fixed. Unfortunately we all must work off the FICO model; it is what drives the interest rate that is offered when one applies for a mortgage loan. If you are checking your credit report, check to see if they have used the FICO model. If not, recognize that the number you are given might not be accurate.
Remember, you may always call me to pull a credit report for you. I’ll give you a report based on information from FICO that is true and accurate. I do charge a nominal fee for this, but it’s in line with what the three bureaus are each offering on their own.
Thanks for reading.
Honored as one of the 2010 Best Mortgage Brokers in Dallas! for D Magazine. Ranked 25th in 2009 production in the category Largest North Texas Residential Mortgage Lenders, according to the Dallas Business Journal!
Geoffrey is the “Frisco Mortgage Guy”!
P.S. I use DropBox as a more secure way to move papers back and forth – FREE! If you sign up from this link – we BOTH get an extra amount of storage space, still FREE!!!