Consumer Advice, Realtor Advice

Different Lenders – Different Credit Scores

Credit ScoresQuestion:  I received a credit score from another sources and it was very different than the score my mortgage lender gave me when I applied for a mortgage loan.  I feel like I’m being miss-lead.  How does this happen?

It’s not uncommon for consumers to receive completely different credit scores from various sources. Many of the credit card companies now offer free credit scores in their customer account statements each month. Consumers receive notifications of their scoring following any significant data breaches along with offers for credit monitoring. Plus there are many consumer websites out there that offer instant credit scores to consumers- some of them completely free of charge. But there are many different score models and numerous score versions of those models. THAT is why scoring differs among various sources.

The two main companies providing scoring models are

  • Fair Isaac (FICO) and
  • Vantage.

Some scores are industry-specific and used to qualify applicants for targeted purchases. For example, scores for automobile credit, retail credit, insurance and most importantly, for mortgage lending.  The FICO score is used for all mortgage lending decisions nationwide. The version of FICO Score used by the lending industry is dictated by Fannie Mae and Freddie Mac (the GSEs).  Score versions are frequently updated to reflect changes in applicant purchasing patterns.  Unfortunately, these score version updates come out faster than the GSE’s platforms and procedures can keep up with. For example, the only FICO model both GSE’s are currently accepting is at least two versions behind whereas the scores that consumers are receiving directly from various other resources are most current available versions which are FICO v8.0 or Vantage v3.0. It’s because of the score model and version differences that the borrower is receiving notices of scoring that varies among sources.

The bottom line? If you received notice of a higher FICO score from a different source (other than your mortgage lender), understand that scoring differs by the type of creditor that inquires and that scoring is based on different scoring models and versions. It’s also important to note that your mortgage-related FICO scores would be the same regardless of where you apply for your mortgage. So regardless of whether you apply with another lender, the broker next door, or a big bank lender, your FICO scores would be the exact same at the given time because any mortgage-related FICO models and versions are dictated by the GSEs. That assures that no one lender has any advantage over any other lender.

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