Credit score

Lending companies reportedly use a different credit rating system for determining credit scores

You must have heard that credit card companies, as well as lenders, use a metric with which they judge you. Since they are lending money to you, they need to ensure that you are not someone who will run away with their money. For this reason, it is seen that there is a term called ‘credit score’ which is used by card companies. Everyone says that you need to maintain a good credit score in order to get a loan or a credit card when needed. Now, there are various factors involved in having a good credit score but we are not going to go into details about that.

One interesting report from CNBC, however, reveals that you are not seeing your exact credit score as the lending companies see them. You might be using a metric for calculating your credit score. However, it is revealed that lending companies use a different metric for the same. Therefore, even if you are having a good credit score on one metric then also it is not necessary that your score will be good on another metric.

This was revealed after a mortgage applicant found that there was a difference of 40 points between his scores from two different models. You must have heard of credit-scoring brands such as FICO and VantageScore. Both of these use a different algorithm for determining your credit. According to the person who found this discrepancy, “It was close to 730. I thought it would help me get a good interest rate,” talking about his credit score. “Then the lender came back with my actual score,” he added. “I was shocked.”

John Ulzheimer, a credit card expert, said: “It’s unrealistic to expect that a number, whether from a website or credit bureau or anywhere else, will be the same number that some future lender is going to use,”. He added,“If it is identical, chalk it up to luck.”

Saqib Malik

Saqib is an established technical expert with 9+ years of background in Web Development and Digital Marketing. His passion for helping people in all aspects of online marketing flows through in the expert industry coverage he provides. He plans to take CloutNews forward with the consistent support from you readers, friends and family! You can contact him at realsaqibmalik@gmail.com or Saqib@cloutnews.com