Posted on Monday, 20th September 2010 by Archie Norton
Q: If I get my “FICO” credit score from all 3 credit bureaus and they are all within the same range (+/- ten points), what other credit score do I need to know before I apply for a loan, and how do I get that score?
A: You’ve taken a huge step in the right direction, as FICO is the most prevalently used credit score by lenders. I also give you kudos for knowing that you have 3 different credit reports, one from each of the 3 credit bureaus. I’m assuming you’ve read through each of your credit reports, to ensure they all contain accurate information. Although you mention that your scores are pretty much the same across all your credit reports, there may be some sort of discrepancy which accounts for the 10 point difference. Probably not anything big, but it does pay to fix any errors.
There are other companies that provide credit scores, but they generally use the same criteria as FICO (read about how your FICO score is calculated). The 3 credit bureaus – Equifax, Experian and Transunion – each have their own brand of credit score. Some major credit issuers have also developed their own branded scores. Since all these scores are based on your credit history, as long as your credit history and FICO scores are in good shape, you should be OK.
Instead of worrying about all the different scores out there, it makes more sense to take a look at other factors creditors consider when extending a mortgage or other type of loan. In addition to your credit scores and credit reports, potential lenders examine criteria like your income and employment history. They then take all this information, combine it with their own underwriting policies, determine whether you will be extended a loan and, if so, what the terms will be. This means that even if you have a good FICO score and a good income, if you’ve only been employed for 3 months and want a $700,000 loan, the lender may consider the credit risk to be too high to extend a loan. In addition, creditors in different regions of the US may perceive your information differently.
The bottom line is that you shouldn’t depend on a single creditor for your loan. Shop around and compare offers to make sure you’re getting the best one.
Tags: Credit Bureaus, Get
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