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Why is your credit score always different, even if pulled the same day!?

Most consumers have no idea how the credit reporting agencies work, and why if they pull their own credit scores it is different than what is reported on their credit card statements, or why it is different when they go to get a car loan or a mortgage.  This difference exists even if you or the lenders all pull the credit the same day and at same time. Most of us have no time nor will to dive into that world of seemingly mathematic algorithmic chaos. This is my attempt to put it into English...

FICO which is the Fair Isaac Company, is the system calculating the credit scores. It uses a set of complex algorithms to determine your credit score. The key word is 'set'.  The purpose of the system is for *companies* to evaluate our credit score in consideration to credit. The system is not designed for the public, however more recently the public sector has been given portals with access to their credit scores via different outlets like Credit Karma or 

The set of algorithms is compiled of different mathematical and credit scoring criteria for DIFFERENT INDUSTRIES.  The automobile industry has a different way to determine your credit worthiness than a mortgage company than does a credit card company. There are over 80 different algorithms/industries that will give you a different score!  Now usually the scores are fairly close, and if you go to two different lenders in the same industry at the same time (shopping mortgages for example) the scores will be even closer if not the same...depending on a mass of other factors.

I was always feeling like it was a circus until I learned this, and think so many of us feel the same way as maybe it is some kind of conspiracy of 'the man'. I talk to many mortgage clients who think their score is X, but when I pull their credit, it is X + 10 or X - 10. I have explained this reason above to clients a countless number of times so they feel better going forward being 'in the know' on what seems to be ridiculous, when it is actually very logical.

Thank you,

Sean Michtavy


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