It’s good to know what your credit score is before you go to a lender or make any sort of financing plan for a big purchase. Of course, they’ll run your credit score when you get there but it’s a good idea to know what to expect. If you’re looking to check your credit score there are a number of places you can go to get your credit checked for free, but there are limitations of free credit scores. This is not to say that you shouldn’t use them, but just know that they’ll only be accurate to a certain degree.
Free Credit Scores
While there are limitations of free credit scores, they are real and can help you up to a certain point. For instance, the credit score that you receive off of such a site like Credit Karma, Quizzle or Credit Sesame will give you a good ballpark estimate that should be similar to your real credit score. This is not to say that the score they give you is fake, but the credit scores that you’ll receive from lenders or from credit card companies is calculated differently and will therefore be slightly different.
Lender’s Credit Scores
Lenders will very often tailor the credit score to fit more directly to the kind of loan that you’re applying for. They will use different scoring models so that the score applies directly to whatever the loan is that you’re applying for. If all the officials are using their own credit scoring models, your credit score is going to vary not only from lender to lender, but it makes a lot of sense that your score might not match up with the score you got online. These tailored credit models are one of the main reasons why the limitations of free credit scores will only allow you to get an estimate of your credit.
Another issue with lenders, is that the lender can choose which credit bureau or combination of bureaus they’re going to get your credit data from. Since the data may be different in each of the three main bureaus they can acquire this data from, it’s nearly impossible to predict what sort of score will be calculated without knowing where exactly they’ll be getting the data on your credit score.
VantageScore VS FICO
While there are limitations of free credit scores, there are some sites that can actually give you a score closer to what a lender will give you since some lenders will calculate your credit using VantageScore instead of FICO (which is the standard for credit scoring.) VantageScore is a tool that is available to the users of Credit Karma. If you use Credit Karma to get your free credit score and then the lender that you go to calculate your credit using VantageScore, the two numbers are going to be a lot closer than if the lender uses FICO.
90% of lenders still use FICO as it has been the standard for so long, but as you may have gathered from reading this, FICO scoring has some major flaws (primarily with inconsistency.) While only 10% of lenders are currently using VantageScore, it may still catch on because of how it calculates credit. Instead of taking information from only one bureau or any possible combination of the three bureaus, VantageScore takes information from all 3 to offer a more accurate and consistent score that looks at the big picture.
To give you an idea of how the scoring is different, let’s take a look at the scoring criteria first for FICO and then for VantageScore.
FICO Scoring Criteria
- 35% Payment History
- 30% Amounts Owed
- 15% Length of Credit History
- 10% New Credit
- 10% Types of Credit in Use
- 32% Payment History
- 23% Credit Utilization
- 15% Credit Balances
- 13% Depth of Credit
- 10% Recent Credit
- 7% Available Credit
When you look at how the two different scoring techniques are used, you can see why there are limitations of free credit scores. These are two of the most standard scoring methods used by lenders, and while neither one of them has been specifically tailored for the kind of loan you want to take out, they’re likely to give you two very different scores. If you and the lender are both using VantageScore, then the score will likely be very similar if not the same, but since FICO is still being used by the majority of lenders, that’s very unlikely to be your situation.
With all of that being said, the best option for free credit scores is most likely going to be if you get your actual FICO score from a site such as Experian, Equifax or TransUnion, which is what lenders are most likely to use. You could also use multiple sites to see the sort of range that your credit score can have so you’ll have a better idea of what your score is likely to be. No matter what, it’s highly unlikely that you’ll be able to determine your exact score until you apply for the specific loan that you’re after, but in the meantime it’s important you understand the limitations of free credit scores.