Beware of useless credit scores

Beware of useless credit scores

In recent months, Mark Wells at Preferred Financial Services has had numerous requests for mortgages from borrowers who already had their own credit report and credit scores, obtained through an online credit report service. However, when they chose to proceed with their loan and a mortgage credit report was pulled, their actual credit scores were much lower than what they had been given online. Here, he addresses questions as to why that happened and offers advice on how to avoid it.

What is the source of the problem?

The sad truth is that many companies advertising “free” credit reports or low cost subscription services, are using a credit scoring system that is “free” for them, but does not accurately reflect your real credit scores.

Which scores are “real” then?

The only valid credit scores for mortgage lending and most other loans are FICO scores (Equifax), Fair Isaac scores (Experian), and FICO scores (Transunion).  Most of the subscription or online services use a scoring system called PLUS or VANTAGE.  These scores can run 50–80 points higher than the real scores, giving the borrower a false sense of how good their scores actually are.

Can’t I get my real scores once a year for free directly from those three credit bureaus? 

No, the law requiring the three bureaus to provide you a free copy of your credit report once a year does not require them to provide your credit scores with that report.

So how do I get my actual credit scores? 

I hate to say you get what you pay for, but in this case, it is the truth. You can sign up with an online service that provides the real scores, or you can ask your mortgage broker to pull your report for you.

What will it cost?

An individual report should cost around $20, and if you and your spouse want to check scores at the same time, a joint credit report would cost about $30.

Should I pay this much to check my scores every month?

I personally don’t think you need to check your scores that often. Apart from identity theft concerns, there is no real reason to check your credit report more than once or twice a year. My mortgage broker’s license depends on my credit scores, and I only check my own scores every six months.

All mortgage rates and closing costs are affected by a borrower’s credit scores. Mark recommends having a mortgage broker review your credit report and credit scores with you to discuss how your scores might be improved.

Mark welcomes questions or comments and can be reached at (864) 235-9596, or by e-mail at