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Credit scores are confusing, and the credit bureaus make them even more confusing: Money Matters

By Teresa Dixon Murray, The Plain Dealer

Q: I just bought copies of my credit scores from Equifax and TransUnion. My score with Equifax was 672 and my score with TransUnion was 615. How can I have this wide of a gap? 
-- S.D., Brunswick 

A: The gap is actually wider than you think. Why? They're on different scales.

The Equifax score is your FICO score on a scale of 850 and the TransUnion score is a Vantage score on a scale of 990. So your Equifax score is something like a B-minus and your TransUnion score is an F. 

First: Why is there such a monster-sized gap in your ratings? Clearly, the bureaus must have different information on you. I'm guessing either TransUnion has a big error that's hurting you, or has negative information about you that Equifax doesn't have. You should analyze your reports side-by-side to figure it out. Then dispute any errors.

Second: Why do the credit bureaus use different scoring systems? Why does one have a maximum of 990 and the other has a maximum of 850? Well, they'll tell you it's because of corporate agreements with Fair Isaac (creator of the FICO score formula). TransUnion and Experian don't release to you your actual FICO score, which is the score that banks, insurance companies and others see if they're checking your credit.
The three bureaus used to release the score that was parallel to your FICO score. Now, they've come up with Vantage. Frankly, I think they want to confuse consumers. Why else would they want you to confuse with a score of 750 that's not really a 750? A FICO score of 750 is an A-plus. A Vantage score of 750 is a C to C-minus.

My opinion: I think the credit bureaus are still reeling from the fact that they were pressured 12 years ago into disclosing a person's own credit score to that person if they asked. And it's still not free -- it generally costs $7 to $10. Before the year 2000, you couldn't find out your credit score unless your bank told you when you applied for a loan. That is appalling, if you think about it.

I wouldn't be surprised if the bureaus try someday to sell you a service to analyze your credit scores, since it's a little confusing with the system they have. This would complement their offering of credit monitoring/ identity theft protection, which they're able to peddle because they make it so easy for errors to appear on your credit report unchecked. (Did you know entities can report negative informationn about you without even having your Social Security number? The name is the primary identifier.)

Anyway, thank goodness the Consumer Financial Protection Bureau is taking over oversight of the credit bureaus. I'm hoping the CFPB will force the bureaus to make it easier for people to understand this critical aspect of their financial lives.

Q: If my fiancee is foreclosed on and we get married later, would this affect my credit score ? 
-- C.M., Cleveland 

A: No, it would not. However, her poor credit rating would affect the interest rate on any loans you apply for together (such as a mortgage) and would affect your auto insurance and homeowner's insurance premiums.

 2012 cleveland.com. All rights reserved.

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