Credit Myth: All Scores Are Created Equal

As I’ve mentioned many times, it is very wise to monitor your credit by accessing your free credit report at www.annualcreditreport.com.  If you’ve been to the website you’ve probably noticed that your credit report is free but your scores will cost money to see.

Sometimes people come to our office that have recently accessed their report and paid for the scores.  They are confused as to why the scores on the report we pull differ from the scores they have in their hand from the website, ours is usually significantly lower.  The reason the scores differ is that they are created using different score models, they are generated with different formulas.

There are many different score models have been created to measure different kinds of risk.  The credit score accessed on www.annualcreditreport.com is a VantageScore.  The credit score used primarily by mortgage lenders is the FICO score.  An 800 FICO score is considered exceptional, whereas an 800 VantageScore is considered average.

There are many different score models and they each have their own name at each bureau.  Some are designed to measure risk of default, but they have others to measure other things, like they all have a score model designed to measure the likelihood of someone filing bankruptcy.  The credit bureaus didn’t create, nor do they own the FICO scoring system.  The bureaus created the VantageScore in an attempt to sell their own scoring model and loosen the strong-hold the FICO scoring system has in the credit world. 

There are many different scores and they are not created equal.  This is important to remember, especially when you are trying to improve your credit.  This info will help you compare apples to apples when it comes to credit scoring.

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