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Why Your Credit Score Can Vary

Do you need a loan? Perhaps you want to buy a new car or home or start a new business. If that’s the case, then you may be planning to get a copy of your credit report before approaching a bank or credit union to borrow the money. It sounds like a good idea, but you may be in for a big surprise — the credit score you get on your report may be significantly different from the actual score the lending institution uses to consider your loan.

Michael Holmes, financial center manager of Fifth Third Bank in Tampa, Fla., says there’s a problem with consistency when it comes to credit bureaus’ numbers. Holmes points out credit bureaus are private companies that serve several different types of customers.

“The consumer is one customer. The banks are another customer. Credit unions could be yet another customer. And unfortunately, there’s often a disconnect in the information provided to each of those customers pertaining to the person the report’s about,” said Holmes. “ So you go to the credit bureaus and get your score, it will say one number. And if I pull it, it could potentially say another number. And when the mortgage brokers pull it, it could say yet another number. ”

One reason for credit-score discrepancies is creditors don’t necessarily file notices with each of the top credit reporting agencies, Experian, Equifax and TransUnion.

“Say there’s s a 30-day late (payment), and you have it on one report but on none of the others, there’s going to be a huge difference,” said Holmes.

But the credit score isn’t the only factor that could affect your loan application. According to Holmes, there are three other basic criteria banks examine when considering your loan request. One is your debt-to-credit ratio which is your overall credit limit compared to your actual debt. Another is your debt-to-income ratio, which is a similar comparison of your debt to your income level.

The third and perhaps most important is the bank’s internal score for you. Banks generate this number by weighing your credit worthiness and their ability to lend. Holmes says a bank’s portion of that internal number depends on the bank’s individual strength.

“So you might have a good credit score and a good debt-to-credit (ratio) and a good debt-to-income (rating), but you don’t pass that bank’s internal credit score,” said Holmes. “And that could keep you from getting a loan.”
While you can’t control a bank’s internal score, there are some things that you can do to improve your credit worthiness. Many financial advisors suggest the common-sense steps of paying your bills on time, paying any delinquent bills and keeping your total credit card debt as low as possible.

If you are denied a loan, the lending institution will write you a letter letting you know which of the top three credit bureaus’ information was used in denying your credit request. You are entitled to get a free copy of your credit report from that bureau, but you must request it within 60 days of the denial. It is also a good idea to get your reports from the other two bureaus as well.

After receiving your credit report, go over it thoroughly to ensure everything is accurate. Don’t forget to look at the spelling of your name, your address and Social Security number for mistakes. Note any information that is incorrect or out dated and list those inaccuracies on the “Request for Reinvestigation” form that should have arrived with your credit report. Make sure to explain exactly what’s wrong with each item. If you didn’t receive the form, you can print it online or contact the bureau for a copy.

Any of your disputed items that creditors who provided the information can no longer verify must be removed from your credit report. The bureau has 30 days to notify you of the results of their investigation. If you do not hear from them by the deadline, send them a follow-up letter.

If the matter still is not resolved or you feel the bureau has treated you unfairly, you can file a complaint with the Federal Trade Commission. You can contact them by going to their website, by phone (1-877-382-4357) or by mail (FTC, Consumer Response Center, 600 Pennsylvania Avenue, NW, Washington, DC 20580). If you choose to write the FTC, also send a copy of that letter to the bureau with which you have issue. Getting the FTC involved should bring the dispute to an end.

For more help with credit issues, visit the websites of top financial advisors, David Bach, Jean Chatzky and Suzy Orman. Bach offers the following free resources:  and Chatzky, and Orman both offer a wide variety of helpful information.