Consumer credit scores are not the same as lender scores

Consumer credit scores are misleading, the credit reporting agencies are not distributing the same scores to consumers as what they distribute to creditors.

There are too many different Brand and Models to match the consumer score up with, so the credit reporting agencies just supply generic scores to consumers.

Don’t get me wrong, the scores can be useful if you are just plotting your own personal progress, but they are no good in determining if you will be approved for a specific industry loan, service, or product.

Lenders are looking at specific scores designed just for them, to meet their particular needs. Like the mortgage industry – they are comparing new mortgage loan applicant to the past statistics of prior mortgage customers. They are looking at the credit behavior. They are going to judge the new customer biased by past consumers.

Bankruptcy Risk Model is looking at the practices of past consumers who have filed bankruptcy. They look at what their credit use was like, try to determine the danger factors that led to the bankruptcy. If they deem your credit behavior to be too closely aligned with these other people they will deny you credit.

Rental Model, this is looking specifically at if you have always paid on utilities bills, they figure if you can’t pay utilities then you are a risk, that you might just default on a rental agreement. Landlords like to avoid evicting people if they can help it, but they will if they have to. They just rather weed you out before hand.

The best way to prepare for applying for a loan is to work on getting your credit score up as high as you can get it. That means if a lender tell you a 680 will get you approved, then you better not come back to apply until you get the score up over 700 to 730 range. The off set I notice ranges from 20 – 50 points. It is possible that it is more than that, but if you try to hedge your chances that is a good range to try for.

Just be aware, and prepared when using credit scores.