Bear With Me, Basic CS Question

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Elijahmex
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Bear With Me, Basic CS Question

Postby Elijahmex » Thu Dec 10, 2015 5:32 pm

I've been in the credit game for less than a year, have done some research however there is one thing that I just don't understand.

I know about the 3 big creditors and I use TransUnion to track my CS bc my bank give me a free update every month.
I understand that all 3 scores are not the same and can slightly differ from one another but WHAT IS A FICO SCORE? and why is my FICO score significantly lower than my other 3 CSs?

Back in August I applied for a CC and was denied. My fico score was 616 according to their letter however my TU was showing 690. Since that letter I managed to get rid of the 1 derog I had & kept my utilization low. My TU increased by 81 points since.

I will be hitting the 1 year mark in February 2016 and if I keep my utilization low I can probably be in the 800s TU and that's when I'll start applying for new CCs. Until then I just want to understand what this FICO score is and what makes it so different than TU, EXP & EF.

Thanks in advance for the replies
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Vattené
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Re: Bear With Me, Basic CS Question

Postby Vattené » Thu Dec 10, 2015 6:52 pm

TU, EXP, and EF (more commonly abbreviated EX and EQ on forums, respectively) are the three major credit reporting agencies (commonly abbreviated CRAs), or the bureaus that collect and report credit information on people. They are the source of information on which credit scores are based, and there are several different models of credit scores. FICO is an abbreviation for both the company (Fair Isaac Corporation) that owns the most prevalent credit scoring model and the model itself. The FICO score is the de facto gold standard of credit scoring models - it is by a wide margin the most commonly used - but there are several other scores based on other models (basically, credit score : FICO :: soda : Coke).

So, your FICO score is the number that results from the FICO model, but the information that goes into the model comes from a CRA. CRAs don't necessarily have all same information, so a FICO score based on data from TU may be different than those based on data from EX and EQ. Your score of 690 you got from your bank was from information TU had on you, but it could have been any number of credit scoring models. Chances are if it doesn't explicitly say it is a FICO score, it was a different model. There are different versions of FICO scores, too, as the model gets adjusted over time. You won't necessarily know what model(s) a bank will use to evaluate a credit card application. For meaningful comparisons of your credit score over time, you need to compare the same credit scoring model (e.g., the same version of a FICO score) and it needs to come from the same CRA.
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Vermonster
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Re: Bear With Me, Basic CS Question

Postby Vermonster » Fri Dec 11, 2015 7:43 am

Most likely case is TU is trying to push their own Vantage Score. This has a different scale (FICO caps out at 800 and Vantage is 900). This tends to make your TU scores look a lot better than your FICO score. If you are paying for the TU, I would look into switching to Experian's credit monitoring. If gives a real FICO for the same price. Also Credit Karma is a nice free credit tracker that pulls info from EQ and TU.
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Elijahmex
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Re: Bear With Me, Basic CS Question

Postby Elijahmex » Fri Dec 11, 2015 8:11 am

Vattené wrote:TU, EXP, and EF (more commonly abbreviated EX and EQ on forums, respectively) are the three major credit reporting agencies (commonly abbreviated CRAs), or the bureaus that collect and report credit information on people. They are the source of information on which credit scores are based, and there are several different models of credit scores. FICO is an abbreviation for both the company (Fair Isaac Corporation) that owns the most prevalent credit scoring model and the model itself. The FICO score is the de facto gold standard of credit scoring models - it is by a wide margin the most commonly used - but there are several other scores based on other models (basically, credit score : FICO :: soda : Coke).

So, your FICO score is the number that results from the FICO model, but the information that goes into the model comes from a CRA. CRAs don't necessarily have all same information, so a FICO score based on data from TU may be different than those based on data from EX and EQ. Your score of 690 you got from your bank was from information TU had on you, but it could have been any number of credit scoring models. Chances are if it doesn't explicitly say it is a FICO score, it was a different model. There are different versions of FICO scores, too, as the model gets adjusted over time. You won't necessarily know what model(s) a bank will use to evaluate a credit card application. For meaningful comparisons of your credit score over time, you need to compare the same credit scoring model (e.g., the same version of a FICO score) and it needs to come from the same CRA.


Thank you for taking the time to reply.

I should really be tracking my FICO score more than TU
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Elijahmex
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Re: Bear With Me, Basic CS Question

Postby Elijahmex » Fri Dec 11, 2015 8:17 am

Vermonster wrote:Most likely case is TU is trying to push their own Vantage Score. This has a different scale (FICO caps out at 800 and Vantage is 900). This tends to make your TU scores look a lot better than your FICO score. If you are paying for the TU, I would look into switching to Experian's credit monitoring. If gives a real FICO for the same price. Also Credit Karma is a nice free credit tracker that pulls info from EQ and TU.


You are right about that. My TU score looks better than all the others & no I am not paying for it, I get a free update every month through my bank.

I do use Credit Karma as well, it shows TU & EQ. However my TU score on Credit Karma is always slighty lower than the TU score that's reported through my bank.
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takeshi
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Re: Bear With Me, Basic CS Question

Postby takeshi » Fri Dec 11, 2015 8:51 am

Elijahmex wrote:why is my FICO score significantly lower than my other 3 CSs?

You don't have just one FICO score. FICO has many models and with most models you have a score with each of the 3 major CRA's. FICO 8 is the most commonly used model but there are creditors and products that use one of the many other FICO models. With any score you need to consider the specific model, the CRA and the relevance of a model/CRA combo to a given creditor. In other words, if a creditor uses TU FICO 8 then that's the only score that matters to that creditor. Any other model/CRA will not be relevant. You cannot pick one model and assume that it applies to all creditors out there.

As for why one score would be lower than another, we don't have the details on how each scoring model assesses report data. All we can say is that different models use different algorithms that evaluate report data differently. They can also have differing point ranges. Given that, you should expect different models to produce different numbers and should not use a score generated by one model to determine a score generated by a different model. Two different models can be coincidentally close or even generate the same number in certain situation but remember that coincidental and causal are two entirely different things.

Elijahmex wrote:I know about the 3 big creditors and I use TransUnion to track my CS bc my bank give me a free update every month.

They're CRA's, not creditors. The CRA's manage your reports. The creditors actually issue credit and determine what you qualify for using scores and report data compared against their specific underwriting criteria.

So, using what I provided above, let's take a look at the scores you're getting from TransUnion. TU provides VantageScores. Which of your creditors use a TU, EQ or EX VantageScore? The scores from TU will be relevant to those creditors. They will not be relevant to creditors that use other scores. Most creditors use one of the FICO models.



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