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In spite of the fact that loan score affects our life on a regular basis (how much we are paying, what we are driving, ...where we are living and working, etc.), most of us still see them as hard to grasp magic creatures. In fact, credibility values are not difficult to grasp or magic. Confusingly, there are a variety of score schemes used by lenders in different sectors to measure the customer's credibility for different kinds of debts.
A person's creditworthiness may differ when it comes to obtaining a motor vehicle loan, an insured contract or a major bank account. Mortgages use the FICO (Fair Isaac Corporation) lending scoring scheme. The FICO has existed since the end of the 1950s and is used by the vast majority of believers. Based on a three-score survey of all domestic rating agencies (Equifax, Experian and Transunion), we use the mean for our rating and leverage.
While FICO does not do free scoring, some major payment processors, such as Discover, have agreements with FICO to allow customers to get a free rating on their month's bills. Unfortunately, a point rating is not always an indicator of what the overall loan is like. Credential Karma offers a free scoring, but it is not from FICO.
The VantageScore (Credit Karma model) has only been in existence for 12 years and was designed by the three domestic banks in response to FICO. Vantage currently has only a small percentage of the total value proposition, but the free gift policy is quickly increasing its appeal to lenders.
Variation in real values results from differences in the way these firms interprete credit payback information and the intervals they use (although VantageScore 3.0 matches FICO's 300-850 range). Unfortunately FICO in its current form is the only Fannie Mae and Freddie Mac certified aircraft. So, the next times you ask for a mortgage, don't be amazed that your results are below what you might have expect.