When monitoring your credit score, you will most probably check the figure received from Experian as a free-of-charge credit score. This is one of the three big consumer credit reporting agencies in the country, which also include Equifax and Trans Union. The score that Experian offers is derived from the FICO Score 8 model owned by Experian. This leads to the question – is the Experian credit score they provide the true score that lenders use? Or is there a possibility that lenders consider other credit scores in making their decisions?
To some extent, it dispels the myth that there is only one real credit score out there when in fact there is not. There are many versions of credit scoring, which are primarily based on the FICO and VantageScore models. Lenders vary in the importance they attach to some factors and have their ways of evaluating your credit status as a borrower. Thus, while one can obtain a free Experian score, it is probably not the same as the number being used by actual lending institutions.
Why Your Score Varies Between Credit Bureaus
Even when you compare the credit reports from Experian, Equifax, and TransUnion, you are likely to find disparities. Credit reports can be reported in the wrong manner or some information may be missing at one or several bureaus. Since scoring models determine your score based on the information in your credit reports, discrepancies result in variations between your scores at different bureaus. Your Experian FICO 8 score is based only on your Experian credit file and does not consider your Equifax or TransUnion credit file. Therefore, it gives an unfair measure that gives low results compared to your true score averages, of course.
The Degree of Score Differences
Research comparing credit scores across different bureaus has established that the difference varies from 20-40 points or even more in some cases. Cross-bureau variations are affected by total accounts reported, differences in account statuses, and detailed payment histories. Since the higher score versions are more favorable for obtaining approval and better terms, such differences are significant. It can be misleading if you have worse average scores at other bureaus but rely solely on your Experian score.
Are The Lenders Exploiting The Experian FICO 8?
A high number of lenders do not use the Experian FICO 8 model. Most of the respondents prefer the traditional FICO Score 8 formula, which calculates the average by the information received from all three national credit reporting agencies. Auto lenders also use auto-enhanced scores in addition to those, which are compiled on Equifax, Experian, and TransUnion bases. Mortgage lenders often employ older FICO Score 5, 4, and even 2 versions for several bureau combinations. Major credit card issuers create their specific scoring models based on previous customer records. What this shows is that one single Experian score gives an inaccurate representation of how credit decisions are made in the real world. Browsing your real cross-bureau FICO 8 with mortgage and auto-specialized scores offers more visibility into your credit competitiveness.
Seeing Your True Credit Picture
Although there are free Experian scores to get the basics of credit, one can be caught off guard when applying for credit formally. Further and more realistic insights stem from reviewing other scores that lenders consider when approving credit. Achieving FICO Scores together with VantageScores on the three major credit bureaus offers clarity on variability aspects influencing your rates. This also helps you understand how lending institutions are likely to view your creditworthiness when applying for substantial financing, for your actual auto and mortgage-purposed scores.
Midway through the year or at least once a year, you get access to these key score versions via your free annual credit report or credit check websites to get an actual score of the credit performance that determines your creditworthiness in borrowing terms and credit approvals. This makes it possible for the scores to be reinforced through proper financial practices before one is compelled to request a loan. Do not presume that your free Experian score means that you are automatically qualified for certain pricing. See other industry and lender-preferred scores for accurate approval, rate, and lending amount information from the true scoring model usage.
The Takeaway
As for the initial credit check, the use of the Experian FICO Score 8 is helpful; however, the score they offer might be quite a shock when applying for financing officially. Actual lenders use different scoring models, which can take into account the data from several burets combined. Using FICO and VantageScores along with mortgage, auto, and credit card-specific scores from all three major bureaus gives a practical understanding of approval chances and financing options. This enables the identification and enhancement of score areas before key credit applications are made to maximize the chances of success. Do not rely on the information given by the free Experian score as the complete picture of lending decisions. Get your whole credit profile checked to get more realistic advice.
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