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.

There are some definite differences when ordering credit reports from Credit Reporting Agencies and other companies, like credit monitoring services.

I strongly recommend that consumers stick with ordering credit reports direct from the credit reporting agencies for these reasons.

1. Cost of credit reports might be cheaper elsewhere, but you get what you pay for.

2. Credit Reporting Agencies do distribute free credit reports when consumers have been.
a. Denied Credit
b. Denied Employment
c. Received Adverse Action
d. Been a victim of ID Theft
c. Plan to look for Employment
d. On Public Aid Assistance

3. Other sources may be good for catching cases of ID Theft, but these companies can’t process disputes or activate fraud alerts.

4. Consumers have to contact the Credit Reporting Agencies for ID Theft, consumers are entitled to free credit reports from each of the 3 major agencies, plus consumers can dispute the fraudulent information and put creditors / collection agencies on notice to the theft.

5. Over vendor credit reports commonly are missing key data. Like contact addresses for reporting creditors and collection agencies. Also these reports are missing the expiration dates to know when negative data is due to come off of the credit report.

6. Credit Reporting Agencies have the file number and phone number that consumers need if they want to call customer service. The numbers are not available on the web sites, and the credit reporting agencies change the numbers from time to time. So just getting one number and expecting to use it again later likely won’t work.

It is just better in the long run to just order credit reports direct from the credit reporting agencies – if the consumer wants to keep an eye out for ID Theft, they just need to be vigilant about reading their billing statements.

Also additional problem with monitoring service, is that if too many credit reports are accessed, it will fill the credit report with too many soft inquiries – that can lead to bumping off accounts which are not easy to get re-added back to the credit report, plus it may cause the credit file to split.

So just remember if you need accurate data when pulling the credit report it is better to go direct to the credit reporting agencies.