Buyer Beware: Does it Matter where you get your Credit Score?

For the most part, credit reports are completely free, while credit scores, those numbers that reflect all the goings-on on your credit reports, cost you about $15. Now most consumers aren't too happy paying this (note the popularity of the “free credit score” search on any search engine); but they still do. It gives them an important bit of insight into their financial future. If you've been one of those people who have always resented what you have to pay to get your credit score, you’ll be happy to know that you are not alone. There is a lawsuit that's been mounted that claims that people aren't getting their money's worth when they get a credit score.

Here's the thing: while there used to be just about four or five websites where you could get your credit score even a few years ago, today there are 25 (it would appear there are lots of businesses that have realized that getting people to pay $20 for practically no effort the business has to expend can be fun). Mention credit scores to any ordinary person they tend to think that it’s a single number - something you can't argue with. That isn't really true though; these 25 websites sell from a mix of seven different credit scores, each one calculated on a different formula of loan applications, credit applications and so on. The lawsuit mentioned before goes to how some companies try to sell you a credit score without telling you what exactly you’ll be getting.

The lawsuit (filed in California), is against Experian (or at least the credit score subsidiary of the credit reporting company) for how they allegedly try to deceive consumers. When you pay $15 to buy a PLUS score from them, they tell you that what you're getting is the credit score that lenders use to make up their minds whether you are worth their trust in the matter of a loan. And yet, if you put on your reading glasses (or at least magnify the font on your computer screen) and trace your finger through the interminable fine print, they claim that what they're selling you this score just for your own use; because they don't sell this for to lenders anymore. In short, here is Experian engaging in doubletalk for a few dollars.

The truth is, apparently, that lenders don't go by the credit score sold by any one (or two) companies. They go by hundreds of credit score calculating models that they have access to. And anyway, if you do want any one credit score to represent accurately (more or less) to you what the lenders try to look at, you'd be best off going by the FICO score (designed by the Fair Isaac Corporation).

So basically, when you get your credit score with any company that tries to sell you anything other than a FICO score, it is a purely imaginary number. And it's not worth your money. The difference between these scores can be no more than 50 points give or take. But that's all it takes to lose out on a lender’s favor.