Here's Why It's Tough to Find Your 'True' Credit Score

Some lenders create their own credit scores by tweaking publicly available models using proprietary analytics. (Sam Edwards/ Getty Images)

Everyone has hundreds of different credit scores, according to Experian – one of the country’s big three credit bureaus. These three-digit representations of our financial responsibility vary based on differing data sources and analytical methods, so it’s fair to wonder: Which one is right?

When you consider the ultimate purpose of a credit score – to help a lender evaluate your eligibility for credit and set the terms of extending it to you, if applicable – the answer has to be whichever score is used by the financial institutions with which you do business. And that presents a problem for the control enthusiasts among us because it’s difficult, and often impossible, to obtain the exact type of score with which you will be appraised.

There are a few reasons why that’s the case, which you can find below, followed by a few more points illustrating why it doesn’t really matter.

[See 12 Habits to Help You Take Control of Your Credit.]

Why Your True Score Is a Needle In a Haystack

1. Proprietary scores are common. Lenders, particularly the most sophisticated credit-card issuers, often create their own credit scores by tweaking publicly available models using proprietary analytics. These custom credit scores aren’t available to consumers, as they’re considered part of their owner’s competitive advantage. You can therefore consider true credit scores for a significant segment of the market to be strictly off-limits.

2. Each model makes triplets. Let’s say you find out exactly what credit score model will be used to evaluate you, perhaps in the context of a mortgage. You’d be one step closer to identifying your true credit score for the situation, but not all the way there. That’s because there are three versions of each credit score, based on your TransUnion, Equifax and Experian credit reports. Determining which of the three iterations a lender uses simply adds another hurdle to an already difficult task.

[See: 8 Ways to Maximize Your Credit Card Rewards.]

3. Arithmetic matters. Lenders don’t always use just one credit score. In fact, they’re often instructed to consider multiple versions, as is the case with mortgages. So how are these scores rationalized? In other words, is the lowest score selected, is an average taken or is some other method used?

Fannie Mae, the government-sponsored entity that’s one of the country’s largest mortgage purchasers, recommends dropping the higher score of two or using the middle score of three, for instance. But the guidelines aren’t always so readily available. In fact, most lenders keep them a secret.

Why Your True Score Truly Doesn’t Matter

1. Credit scores are just one ingredient. Lenders don’t make decisions based on credit scores alone, as these shorthand risk indicators don’t provide the complete picture of a borrower. They don’t directly reflect income, all existing debt obligations and a host of other factors. That’s why Chase’s 2015 annual report includes the language, “While the borrower’s credit score is another general indicator of credit quality, [Chase] does not view credit scores as a primary indicator of credit quality.”

So take it from the horse’s mouth and don’t put all your eggs in the credit score basket.

[See: 12 Simple Ways to Raise Your Credit Score.]

2. Any reputable score can get the job done. Although it’s nearly impossible to exactly replicate a lender’s underwriting practices in advance of submitting an application, any reputable credit score can still be quite effective. For one thing, while the exact number of your score may change a bit from model to model, all are likely to place you in the same general credit category (i.e., excellent, good, fair/limited and bad). And that will really tell you all you need to know about your odds of approval.

What’s more, prepping for a specific upcoming financial application isn’t the only way to use your credit score. Consistently referencing the same type of score over time will also help you track credit-improvement efforts while giving you a sense of when it’s time to renegotiate the terms of existing financial products or replace them altogether.

At the end of the day, it’s important to point out that choosing the wrong type of credit score to check isn’t most people’s biggest mistake. That would have to be failing to check any sort of credit score, which is a mistake that 52 percent of Americans have made for the past year, according to the National Foundation for Credit Counseling. So make a point of getting to know your credit. Your wallet will ultimately thank you.

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