a little dazed and confused here...

[Anonymous]

New member... just found this forum. And after just a quick glance at some of the topics, I must say I am amazed at the level of knowledge on this site. Seriously, you guys have got this down to science. Unfortunately, I am at the other end of the scale and just now diving into the nitty-gritty details of credit history & scores. So I apologize in advance for what I'm sure will be stupid questions...

A little background. The main reason I have so little understanding of how credit works is that I never had to worry about it. I'm 55, and my wife and I have always lived "beneath our means"... bought less house than we could afford, often paid cash for cars, paid all bills on time, etc. So whenever we applied for a mortgage or loan, our credit always came back as excellent and we qualified for the lowest possible rates. So I never really bothered to know the scores or monitor the credit reports. I guess you could say I got complacent and assumed my credit would always be perfect.

Well, with mortgage rates now so low, I recently began to think about refinancing our house. Went to annualcreditreport.com last week just to do a quick check, and was surprised to see a Negative Account... a credit card with two "over 90 delinquent" reports from 2009. I knew nothing about it, but my wife remembered she had made an online purchase, paid it in full, but it kept showing up on our bill. Said she went round-and round with the CC company several times and it was never resolved. Got so frustrated she finally just told them to stick it and cancelled the card. Yeah, I know, that was a mistake.

Anyway... did a little research and got thoroughly confused about all the different credit scores that are available. Read that most of the "free offers" are scams, some of the scores are bogus, and ended up here at myFICO. Took advantage of the free trial to get my score - 738, which is apparently good but not great. Then went to Equifax and paid $15.95 for my score... that came back as 803. Then saw their offer to get all 3 scores for $19.95 more and did that... which showed Experian at 805 and TransUnion at 803. OK, stupid questions:

1.  I sense that I got ripped off on the additional $19.95 at Equifax, as all 3 scores were almost identical, and the reports were exactly the same. Seems they took the same data and just switched the names at the top... am I right?

2.  If my assumption is right in #1, then I guess you have to go directly to each of the 3 credit agencies and pay for a true score?

3.  Why the disparity? If the myFICO score is 738, how can the other 3 be so much higher? And if they are all FICO scores, what is the difference? I now have 4 scores (EQ, TU, EX, myFICO) and have no idea which is the official one, or the most accurate, etc.

4. How would I go about challenging the Negative Account from 3 years ago? (My wife remembers none of the specific details now, and has long ago lost or thrown away her notes about who she talked to and when, etc. Yes, she realizes she should have pursued it then to a final conclusion, while the facts were fresh in her mind and she had all the documentation).

Again, sorry for my ignorance in these matters and thanks in advance for any comments or advice.

[GregB]

Sorry, Syd Barrett is dead, who are you?

If you are getting a new mortgage they will use a FICO 04 based score from each of the three CRAs. They will qualify you based on your middle score, ignoring your best score and worst score.

If you got your EQ FICO here then that will be exactly the score they use for EQ, called EQ Beacon v5.0.

If you got you TU FICO here then that is TU FICO Classic 98 and the one they will use will be the next version. TU FICO Classic 04 . You can't buy that anywhere. You could buy it here is they would update.

They will also use your EX FICO v2, which you can't buy anywhere except if you a member of a few CUs that offer it. It was available here until a few years ago.

The information on the reports from the CRAs is correct but the scores are useless. Consumer educational scores not used by any lender. Don't follow the advice to improve it either.

You wifes mistake was HUGE. It could very well cost you the refinance. I would suggest you contact them and straighten it out. Offer to pay them again, with interest even, if they will delete.

[Anonymous]

GrebB - thanks for responding.  Let me summarize my understanding of your reply and see if I have this straight...

Any and all credit scores that I get online, whether here at myfico or directly from the 3 reporting agencies... are basically useless.  Meaning they are only for "consumer education" as you put it, and not what a potential lender sees when they pull a credit score.  If that is correct, any idea about the relative accuracy?  Are they close to what the lender gets, or typically higher or lower, etc?

Not sure where to start with my wife's purchase... at this point she cannot remember if it was from QVC on TV, or online, or what exactly.  So we cannot contact the original vendor.  I guess we should contact the CC company and start there?  (it was a Bank of America card).  Oh, some clarification, she may have actually paid it off before cancelling... the Negative Account entry shows a 0 balance, 0 past due, and "pays as agreed" under Status.  Do you think BoA would still have info from this account and work with us to remove it, or are we pretty much stuck with the two "over 90" reports?

[chasmith]

If the material on your three reports is the same, your FICO mid-score should be somewhere around the 738 for your EQ from MyFICO.  If the 90 day lates are from 2009, there's no charge-off and the bill was paid, thus three years old they may be having a limited impact on your score.

I've seen variously that 720 or 740 gets you the best status for a mortgage.  So chances are you can refinance for a good rate reduction (especially if you cut the term of the mortgage at the same time to reflect that you've been paying it down).

If the card wasn't paid and was charged-off you'll need to pay it off to refinance.  Paying it off might advance the date and hurt your score, so I would try to work through the card company's executive office and offer a pay-for-delete.

[GregB]

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@Anonymous wrote:

GrebB - thanks for responding.  Let me summarize my understanding of your reply and see if I have this straight...

Any and all credit scores that I get online, whether here at myfico or directly from the 3 reporting agencies... are basically useless.  Meaning they are only for "consumer education" as you put it, and not what a potential lender sees when they pull a credit score.  If that is correct, any idea about the relative accuracy?  Are they close to what the lender gets, or typically higher or lower, etc?

Not sure where to start with my wife's purchase... at this point she cannot remember if it was from QVC on TV, or online, or what exactly.  So we cannot contact the original vendor.  I guess we should contact the CC company and start there?  (it was a Bank of America card).  Oh, some clarification, she may have actually paid it off before cancelling... the Negative Account entry shows a 0 balance, 0 past due, and "pays as agreed" under Status.  Do you think BoA would still have info from this account and work with us to remove it, or are we pretty much stuck with the two "over 90" reports?

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No, the EQ FICO sold here is exactly the EQ FICO used for a mortgage. The TU FICO is one revision earlier than the TU FICO used for a mortgage. They are both Classic FICO scores. That makes most of the complex algorithm the same so it is more similar than any other score available for TU.

If I read your post correctly, you are saying that the info on the reports from EQ, TU, and EX are all exactly the same. If you have only had accounts with major creditors that report to all three CRAs, that is possible. My reports are all the same but that isn't true for most people. If they are the same then your mortgage application scores from TU and EX will be pretty close to the EQ FICO sold here.

With the additional info on the over 90 account, my opinion is now a bit different. I read it as they never credited you payment and it was eventually charged off. Sounds like she paid it but managed to have two 90-day lates reported. The key info is that it says "pays as agreed" in Status. That is a smaller deal and will continue to affect your score less as time goes by. Being a major late, they will hurt some until they drop off your reports at 7-7.5 years. The good news is the damage is done, and it will get better. The bad news is that BofA is about the worst at removing a late via GW. If anyone has ever managed it, it is VERY rare.

[Anonymous]

Thanks for all the replies.  I swear, I must be as dumb as a bag of hammers, because I'm still confused.  If the myFICO score (738) that I got was from Equifax, then why is it so different from the one I got directly from the Equifax website (803)?  What am I missing?

Also, if all of these scores are "useless"... then what's the point?  I'm paying for credit scores that are meaningless and still have no idea what a lender might see?  I find that a little bizarre.  Hey, wanna buy this laptop... it won't boot up and it's totally worthless, but you can have it for the low low price of.... 

[Asailorshort]

Who is reporting the 90 day lates?  BoA cc?  I would request bank statement from the months they show you as late, plus maybe a couple months before and after.  This will provide you proof of what you paid to them and when.  If your statements prove you made timely payments I would then dispute the lates with the original creditor with your past statements showing payments to them as proof.  If, upon receiving your old bank statements, you realize you had made an error and did mistakenly fail to pay, you can write a GW letter to them  explaining your situation and ask that they remove the lates as a gesture of goodwill.

As far as scores go, FICO scores are the only ones that matter as that's what they'll use when you apply for mortagage refinancing.  They will use EQ same I model that's sold here). TU04 (not available for purchase anywhere to my knowledge),  and EX (also not available for purchase anywhere).  They'll use the mid score of those 3 numbers.  So, basically the only real score you have is the EQ you purchased from here.  There's no telling if its your highest, lowest, or mid score.  You can make some educated guesses of where it falls among the three though by closely comparing the info reported on each of the three credit bureaus reports.

[Asailorshort]

oh Syd, your confusion over the various scores available is the same confusion almost all of us have had to deal with at some point.  And clearly, the people who sell those scores are counting on us being confused or people would rarely buy their products.

the reasons for the score differences are because they all use different scoring algorhythms.  For instance, in one model payment history could be 30% of your score.  On a different model it could be 35% of your score.  

I do agree with e what everyone else is saying though, that your mid score is probably very close to 738.  on the toughest lender scales, that would qualify you for the second best rate available.  760 or above is generally what is now needed to get the best possible rate. 

you may also be able To buy points to get you at or nearer the best possible rate.  However, I'm guessing that refinancing even at second tier rates, you'll save thousands over the life of your mortgage.

[chasmith]

Each of the CRAs sells a "FAKO" score from their website.  It's even more confusing because you can also buy a true FICO score from EQ.

You can get true FICO scores from MyFICO for EQ and TU, but the TU model is older than the one lenders use.

EX won't sell FICO scores to consumers.  The only way to get one is by joining one particular Credit Union in PA or having a lender provide it.

This is all wrapped up in contracts between Fair Isaac (owner of the FICO scoring algorithms) and the CRAs.  The CRAs are greedy and want to try to establish their competing Vantage Score with lenders (Fair Issac gets a fee eveytime a FICO score is generated).  But guess what, the FAKO they sell to consumers isn't the Vantage score either.  In their fine print they say it is for educational purposes only.

You could try identifying a reputable mortgage broker locally and work with them.  They'll pull a true triple score, and have to provide it to you.  That will cost you one inquiry, which shouldn't hurt much.  Take it from there, but I'd still suggest you clarify the 90 day lates a bit more.

[GregB]

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@Anonymous wrote:

Thanks for all the replies.  I swear, I must be as dumb as a bag of hammers, because I'm still confused.  If the myFICO score (738) that I got was from Equifax, then why is it so different from the one I got directly from the Equifax website (803)?  What am I missing?

Also, if all of these scores are "useless"... then what's the point?  I'm paying for credit scores that are meaningless and still have no idea what a lender might see?  I find that a little bizarre.  Hey, wanna buy this laptop... it won't boot up and it's totally worthless, but you can have it for the low low price of.... 

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What you are missing is that the score you got from EQ is complete nonsense.

The best documented information is from TU so let's use that as an example. They sell 51 credit scores to lenders. 21 of those are various FICO scores, the major ones are the Classic versions of FICO 95, 98, 04, and 8. Then there are industry specific score of each of those, generally a BankCard version, a Auto version, etc. The two other FICO versions were FICO NexGen versions that seem to be almost usused. The other 30 scores sold to lenders are a variety of general risk scores and specific scores such as a score that a CA might run on you when deciding to buy an unpaid collection account from the creditor. Some lenders will take these scores and tweak them for their own parameters. THEN they also sell a couple of scores to consumers that they don't sell to lenders.

Mortgages are easy in that Fannie, Freddie, FHA, VA, various repurchasers, etc. etc. all require the FICO 04 Classic version from each CRA for processing, guaranteeing, reselling, etc. The only ones that are free to use a different score is a private lender, a bank that only loans from their own assets, etc.

All other lenders will use the credit score that they think is best for their needs. The usual motivation is more good customers and fewer bad ones or loaning to more customers without an unacceptable increase in bad ones.