Your Online Credit Score May be Bogus
If you’ve ever bought your “free” credit report online, chances are you’ve been deceived by the credit reporting agency who sold it to you. Like a magician pulling a rabbit out of a hat, these credit agencies make up a score and sell it to you.
Of course, there’s a mathematical formula behind the score they sell but the number you receive bears no relationship to the real number the exact same credit reporting agency will sell to actual and prospective creditors.
What does this mean to you in the real world?
Let’s say that you buy your credit score online and the number you get is a 680. The number sold to a credit card company, an auto dealer, a prospective mortgage lender, or even a potential landlord might actually be in the 500s. That’s the difference between getting a decent rate on a loan and not even qualifying for one!
Like 3-card monte, you’re being played by credit reporting agencies.
The real number that you want to look at is your FICO score, but as explained by Aleksandra Todorova in Not All Credit Scores Created Equal, even your FICO score can vary depending upon the type of creditor buying the information.
Quite frankly, it is amazing that the U.S. Federal Trade Commission (FTC) hasn’t stepped in and made these clowns actually report your real FICO number, including any variations of it so that you know what you’re dealing with the next time you apply for credit.
In fact, if you’ve been deceived when buying your credit report online, be sure to file a complaint with the FTC about it.
About the Author
With an advanced international law degree from Georgetown University and more than 15 years of real world legal experience, Attorney Mike Young is President of the Internet Ethics Council and creator of Website Legal Forms Generator software. He helps entrepreneurs protect and grow their businesses online.
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As a former F&I manager for auto dealerships with over 28 years experiencem my colleagues and I often discussed the use of scores when they fere introduced in the 90’s.We felt and most people still do that the use of these scores give the credit reporting agencies a vcested interest in keeping a customer’s score low. When I was trained for finance I was taught to consider the 3 c’s of credit when evaluating a credit application. The 3 c’s are credit, collateral and character. Take for an example the factory worker who is laid off every year for a set period of time. His score may not be high due to missed payments during this period. Yet in a case such as this if you call his creditors on the phone for a rating you will often get a different picture. The creditor may tell you that Bill gets a little behind each year around a certain time but always catches up after the work starts up again. This speaks to the character of the client, But today using computer generatred scores and grading systems this info never is looked at by the creditor. In my opinion this use of computers to score and make decisions without investigation is one of the leading cauese of identity theft.
David,
Thanks for sharing your expertise in this area. It is a shame that these credit reports don’t take into account personal character factors like the ones you mention. That’s an unfortunate business decision. Where the credit reporting agencies are crossing the line is selling credit scores to consumers that bear no relation to the scores that really count when it comes to qualifying for credit.
Best wishes,
-Mike
i am gonna show this to my friend, man
Good article and Wonderful comment posted by David.It’s clearifying things
You are absolutely right as these online credit scores just calculate facts and figures and not a person’s back-story so if a person has a blip on their report for missing a payment then it will just say missed payment which looks bad on anyone’s report. The online credit scores are meant to give a roundabout standard score depending on which company you get it from. There is not one company that owns everybody’s information, groups of persons information are owned by different companies and if you want your score from one company and another has it then the first company has to get it from the original company before getting displaying it to you. But if there are any problems with your credit score like false information or some data is wrong then it can be corrected by writing a letter to the company you got it from and they will flag up the wrong information for future reference.