My Credit Score Was Actually 70 Points Lower Than I Thought—And Yours May Be, Too

published Feb 8, 2019
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When my husband and I decided to take out a home equity line of credit for a renovation, we assumed we’d get a great interest rate based on our good credit scores. We’ve always paid our bills on time and don’t maintain any credit card debt. There’s just one demerit on my report; a medical bill in collections I’ve unsuccessfully disputed. But even with that blip, the credit monitoring service I use—CreditWise—said my score hovered in the high 700s!

If you’re like me, you keep a dutiful eye on your credit score and probably use a credit monitoring service, either through your credit card, or a website or app, like Credit Karma. But I found out the hard way that the score you get on these services isn’t always the credit score your lender uses: Once we applied for our HELOC, our loan quotes came back with a credit score I did not anticipate—one that was 70 points lower than what CreditWise had shown me. This lower score pushed us into a different credit bracket than the “excellent” we were relying on, meaning we wouldn’t be receiving the best interest rate we had budgeted for.

Obviously this was frustrating. What’s the point of subscribing to a credit monitoring service if you’re getting an unreliable score? Sure, it felt nice to see that high score every month, but if I’d known it was actually far lower, I’d have done more research on that minor collection and tried to find a way to resolve it. We were far enough along in the HELOC process that we decided to just go for it—but over the next 30 years, those 70 points could cost me thousands in additional interest.

Is there anything I could have done to prevent this? I talked to Shannah Compton Game, a Certified Financial Planner based in California, for insight into what I could have done differently.

She explained that what happened to me is common: The real culprit was that I was looking at a different credit score than what my lender pulled.

About 90 percent of lenders use FICO scores—a data analytics company founded back in the 1950s to standardize people’s creditworthiness. “It’s the original mechanism for credit scores,” she says.

However, there’s also VantageScore (what CreditWise was showing me)—which is a consumer credit score that came out in 2006 from the three major credit bureaus (TransUnion, Experian, and Equifax).

Each of these scoring models weighs the measures of creditworthiness differently—and therefore end up with different scores. On top of that, each of these FICO scores and VantageScores each have an individual score, based on each of the credit bureaus. So you can have a TransUnion FICO score and a TransUnion VantageScore and they can be wildly different, and you can also have Equifax FICO and Experian FICO scores that vary from each other, too.

Additionally, each of the scoring models release new versions periodically, like VantageScore 4.0 and FICO Score 8, so even if you’re looking at two FICO numbers, they may vary according to which scoring version they’re using.

Additionally, some credit monitoring services may not even be showing you the same FICO or VantageScore that’s available to lenders or insurers. Instead, you might be getting a consumer-focused “educational score,” which is somewhat in the range of your credit score, Compton Game says.

Related: 7 Things Real Estate Agents Wish You Knew

Confusing? I think so, too—and so did the government. Back in 2017, the Consumer Financial Protection Bureau (CFPB) ordered TransUnion and Equifax to pay fines and restitution to consumers after they “deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises.”

But are these educational scores good for anything? Yes—monitoring changes in your credit report.

“If your score drastically drops, you know something’s going on. [Maybe] your identity has been stolen and that’s your alert to take action. You take the scores with a grain of salt and use them to keep on top of anything that may be happening.”

And before you make a big purchase be sure you’re working with real numbers—check exactly what credit score is being pulled and ask your mortgage broker if it’s comparable to what they’re pulling.

“I tell people, go get pre-approved by a mortgage broker so you know exactly the details [of your credit score],” Compton Game says. It’s likely that they’ll be pulling a tri-merge (or three-bureau) credit report, which uses the middle of your three credit bureau scores.