Your Free Credit Score May Not Be What You Think
Contrary to popular belief, you don’t just have one credit rating . You have several of them, and most likely they are all slightly different. Your overall FICO score is the most popular among them, but usually not the same score you get with “free credit rating” offers.
Many of the free credit rating offers , such as Credit Karma , use what is called VantageScore. This model was created by three major credit bureaus – TransUnion, Equifax and Experian. This is not your FICO score, nor is it necessarily what lenders use to assess your credit history. In fact, many lenders use their own scoring model, even beyond the FICO.
Forbes author Nick Clements breaks this down:
FICO and VantageScore are examples of general scores. Why are they called “universal”? Because any lender can buy (and use) an account. And the score is constructed using data from credit bureaus for the entire population.
However, most lenders create their own individual credit ratings. With an individual assessment, the lender will build a model using their own data. Imagine that you are a bank risk manager. You can use the FICO score (which was constructed using the entire population) or you can build your own model that takes into account the people who have borrowed from your bank in the past. It is clear that an individual account can be much more useful. Banks usually use custom scores and the general public will never be able to access these custom scores.
As Clements explains, that doesn’t mean your free credit score is useless, no matter where it comes from. These ratings may not be as useful as you think they are, but they still give you an idea of where your creditworthiness is. It just goes to show that more important than your actual score is your overall credit condition and your range. For more information, go to the full version of the message at the link below.
Are Free Credit Ratings Useless? | Forbes