Who Is Behind Your Credit Score?

Other scoring systems can be obtained through credit resellers who pay the credit bureaus for their data and then repackage it to meet a lender’s needs. Wilson likens these credit resellers to boutique owners who keep branded merchandise from big name clothing manufacturers on its shelves. “The boutique doesn’t make Seven jeans, but they do have them on sale,” she explains.

Whatever recourse a lender opts for to determine a borrower’s creditworthiness, the takeaway remains the same. The score (or sometimes an average of multiple scores) that they are looking at will likely vary from the one that consumer has access to.

“They’ll be different codes underneath the score,” Chad Smith, senior vice president of mortgage services for Lending Tree, said when he explained the process his company uses to check a borrower’s credit to MainStreet. “There will also be commentary on what’s driving it.”

What does it all mean?

So does this tangled web of proprietary information and the formulas used to evaluate it suggest that pulling your credit score is pretty pointless?  Surprisingly,not at all. 

Smith explained that lenders aren’t just looking at a borrower’s credit score, no matter which particular one they use. They’re looking at the balances on open lines of credit, a consumer’s overall debt ratio and their credit history, particularly within their industry. This is basic information that also appears on a consumer's credit report, no matter which formula is being used to calculate the accompanying score. 

“The score is meant to be directional,” Wilson says, explaining that whether or not you’re looking at a FICO score, Vantage Score or a credit bureau’s own unique version of either, the point should be to identify the same red flags a lender may spot and take corrective action to eliminate them before you apply for a loan.

“The idea is not to focus on the score, but instead on what you can do to improve it,” Sweet agrees. She explains that any credit report will highlight at least five factors driving the score up or down, which essentially provides a road map for how you can increaseyour credit profile.  She also says that consumers should also put more emphasis on the risk rating they are issued on their credit report since “that’s consistent no matter what number you use.”