topic Re: Confused by Equifax Score.....😳 in Understanding FICO® Scoring

Confused by Equifax Score.....😳

jazzyvar84 — Sun, 18 Aug 2019 03:51:21 GMT

Hello credit warriors! I applied for a credit card through my credit union and was denied. They said my Equifax score was 549. I was shocked because I’ve been working diligently on my credit for over two years now. I applied for financing at a local furniture store today and my Equifax score showed as 696! They approved me for $6,000 worth of furniture with no money down. These inquiries are only two days apart. Why did my credit union see such a low number and the furniture company sees a much higher one? I also got the manager to print it out, so that I can show the credit union on Monday. Can anyone explain this??? Thanks for any help!!!

Re: Confused by Equifax Score.....😳

Anonymous — Sun, 18 Aug 2019 04:31:58 GMT

Credit scores can have different models. While the most commonly used is FICO, sometimes lenders use different scoring models which result in different scores. You would need to find out what exact scoring models both these two lenders use, as neither has explicitly stated they used FICO.

Re: Confused by Equifax Score.....😳

jazzyvar84 — Sun, 18 Aug 2019 04:41:54 GMT

I see something on the furniture paperwork that says Vantage 3.0.

Re: Confused by Equifax Score.....😳

Anonymous — Sun, 18 Aug 2019 10:56:32 GMT

That’s the disconnect. VantageScore 3.0 is the model used by most monitor services like Credit Karma, WalletHub, Credit Sesame, etc, but is NOT the model used by financial institutions and card issuers. They can vary widely since they weight scoring factors differently.

In terms of likelihood of loan or credit card approvals, the score given by the bank is the accurate one. Seems you lucked out with the furniture place using VS3.0.

Time to pull your reports and see what’s holding you down. Free three bureau pull at www.annualcreditreport.com if you haven’t done it in the last 12 months. Get your reports and post up specifics and we can help you attack whatever is holding you back.

Re: Confused by Equifax Score.....😳

sarge12 — Sun, 18 Aug 2019 11:01:14 GMT

@jazzyvar84 wrote:
I see something on the furniture paperwork that says Vantage 3.0.

Ding, ding, ding, ding....Congratulations, you have finally found some lender that actually does a Vantage 3.0 credit pull for loan approvals. To the best of my knowledge, nobody else has ever posted in these forums that a lender pulled from Vantage 3.0. The Vantage 3.0 score was created by the big 3 CRA's to compete with fico, but it never has seen any wide use. Now, about that furniture approval...that is almost certainly financed by a CFA(Consumer Finance Account) If you lack this little peice of knowledge, it can cost you for 30 years. A CFA is viewed as a negative on earlier versions of fico, even if always paid perfectly. The mere existance of a CFA on those versions of fico can, and will lower those scores. That is vital to know because those scores are used for the 3B pulls by mortgage lenders to set the interest rate offered on a mortgage, which is why that furniture debt can cost you thousands in added mortgage interest, and the CFA will be on your report for 10 years. It may be too late if you have already pulled the trigger on the furniture debt, but if so, perhaps this post might prevent someone else from doing so. If you have no intention of buying a house in the next 10 years, a CFA has no more effect on fico 08 or 09 scores then any other installment loan does.

Re: Confused by Equifax Score.....😳

sarge12 — Sun, 18 Aug 2019 11:14:46 GMT

@Anonymous wrote:
That’s the disconnect. VantageScore 3.0 is the model used by most monitor services like Credit Karma, WalletHub, Credit Sesame, etc, but is NOT the model used by financial institutions and card issuers. They can vary widely since they weight scoring factors differently.

In terms of likelihood of loan or credit card approvals, the score given by the bank is the accurate one. Seems you lucked out with the furniture place using VS3.0.

Time to pull your reports and see what’s holding you down. Free three bureau pull at www.annualcreditreport.com if you haven’t done it in the last 12 months. Get your reports and post up specifics and we can help you attack whatever is holding you back.

It being a furniture store it is most likely a CFA, and they might very well use a Vantage 3.0 pull. What I can state is that no lenders that I have seen posted has used the Vantage score model. As far as the OP lucking out that they pulled Vantage score, that depends on whether it is a CFA, and whether the OP plans to get a mortgage loan in the next 10 years or not. If so, the fact they pulled Vantage score for the approval may be bad luck.

Re: Confused by Equifax Score.....😳

Anonymous — Sun, 18 Aug 2019 11:34:21 GMT

@sarge12, agreed completely. To put my reply in the proper context, it’d be “you lucked out if that furniture was definitely needed and spreading the cost out was necessary”. I agree that if a mortgage is needed in the medium-future, that furniture may end up carrying a pretty high cost.

Re: Confused by Equifax Score.....😳

sarge12 — Sun, 18 Aug 2019 11:57:37 GMT

@Anonymous wrote:
@sarge12, agreed completely. To put my reply in the proper context, it’d be “you lucked out if that furniture was definitely needed and spreading the cost out was necessary”. I agree that if a mortgage is needed in the medium-future, that furniture may end up carrying a pretty high cost.

Unfortunately, the average borrower has no idea that just having a CFA on their credit report is a negative on the earlier fico versions used for setting their mortgage interest rates. They also often do not even know their financing is with a CFA. Having had Honda Financial report as a CFA, I know at that time I had no clue about all that. Without this community, I would likely never have known. That really ticks me off too, because I and any borrower should be informed of that before signing the note.

Re: Confused by Equifax Score.....😳

Anonymous — Sun, 18 Aug 2019 12:04:12 GMT

Agreed. I didn’t even know that such a thing as a CFA existed until I came here. It’s too bad that they don’t get more publicity too. In my town, a well-known furniture place is always advertising and pushing their in-house financing group, which I’m sure is coded as a CFA. Transparency in lending would be a great thing.

Re: Confused by Equifax Score.....😳

sarge12 — Sun, 18 Aug 2019 12:23:48 GMT

@Anonymous wrote:
Agreed. I didn’t even know that such a thing as a CFA existed until I came here. It’s too bad that they don’t get more publicity too. In my town, a well-known furniture place is always advertising and pushing their in-house financing group, which I’m sure is coded as a CFA. Transparency in lending would be a great thing.

I think the earlier versions treating a CFA different than any other installment loan is likely the main reason that the mortgage lenders have not migrated to newer versions. I am sure they at some point did side by side analysis of their currently used models and found that the lower scores due to stuff like this being weighed differently in fico 08, would reduce the average interest rate if they migrated to it. I think both the lack of consumers being informed and the lowered scores resulting from the CFA is intentional.

Re: Confused by Equifax Score.....😳

Anonymous — Sun, 18 Aug 2019 12:42:32 GMT

Yep. As always, follow the money.

Re: Confused by Equifax Score.....😳

jazzyvar84 — Sun, 18 Aug 2019 14:39:08 GMT

Hello. I’m not familiar with FCA loans. Why would it be negative? I’ve paid off other pieces of furniture from Kimbrell’s and it never hurt my score.

Re: Confused by Equifax Score.....😳

sarge12 — Sun, 18 Aug 2019 17:24:28 GMT

@jazzyvar84 wrote:
Hello. I’m not familiar with FCA loans. Why would it be negative? I’ve paid off other pieces of furniture from Kimbrell’s and it never hurt my score.

It would not hurt fico 08 or fico09....the excuse given for being nagative on the fico 2, 4, and 5 is that consumer finance accounts have traditionally carried debt that would not be approved at banks, and charged very high interest for the added risk. In any case loans that are coded as a CFA is seen in those models as a negative, even if fully paid perfectly. Just the existance of the account on a credit report will lower those scores until it falls off the report 10 years after paid. If you want to say it is stupid beyond belief, you will get no argument from me, but it is what it is. If you have not checked the other scores and looked at the reason codes you would not know...well not until you started the mortgage process.

Re: Confused by Equifax Score.....😳

sarge12 — Sun, 18 Aug 2019 17:34:52 GMT

@jazzyvar84 wrote:
Hello. I’m not familiar with FCA loans. Why would it be negative? I’ve paid off other pieces of furniture from Kimbrell’s and it never hurt my score.

Also, being financed at a furniture store is not a guarantee it is a CFA, but smaller furniture stores have to use finance companies as banks usually will not work with them. Banks are more interested in cars and houses, and big retailers usually have Synchrony or Comenity credit cards. Furniture and smaller appliance stores are more often than not using consumer finance accounts to secure financing.

Re: Confused by Equifax Score.....😳

jazzyvar84 — Mon, 19 Aug 2019 14:09:00 GMT

Hello,

I just spoke with the account specialist at the furniture store, and she informed me that becuause of my credit score that my loan is actually through WellsFargo. Does this mean that it could still report as a CFA on my credit report?

@sarge12 wrote:
@jazzyvar84 wrote:
I see something on the furniture paperwork that says Vantage 3.0.
Ding, ding, ding, ding....Congratulations, you have finally found some lender that actually does a Vantage 3.0 credit pull for loan approvals. To the best of my knowledge, nobody else has ever posted in these forums that a lender pulled from Vantage 3.0. The Vantage 3.0 score was created by the big 3 CRA's to compete with fico, but it never has seen any wide use. Now, about that furniture approval...that is almost certainly financed by a CFA(Consumer Finance Account) If you lack this little peice of knowledge, it can cost you for 30 years. A CFA is viewed as a negative on earlier versions of fico, even if always paid perfectly. The mere existance of a CFA on those versions of fico can, and will lower those scores. That is vital to know because those scores are used for the 3B pulls by mortgage lenders to set the interest rate offered on a mortgage, which is why that furniture debt can cost you thousands in added mortgage interest, and the CFA will be on your report for 10 years. It may be too late if you have already pulled the trigger on the furniture debt, but if so, perhaps this post might prevent someone else from doing so. If you have no intention of buying a house in the next 10 years, a CFA has no more effect on fico 08 or 09 scores then any other installment loan does.

Re: Confused by Equifax Score.....😳

jazzyvar84 — Mon, 19 Aug 2019 14:10:19 GMT

The credit specialist at the furniture store just informed me that my loan is actually through Wells Fargo bank because of my credit worthiness. Could this still report as a CFA loan?

Re: Confused by Equifax Score.....😳

Anonymous — Mon, 19 Aug 2019 15:45:00 GMT

I have seen many post in these forums from lenders using Vantage scores, this is far from the first. and I personally came across several when I was car shopping that used Vantage exclusively. One dealer pulled up a report on his screen and checked off to send the apps just to those that only use Vantage.

Re: Confused by Equifax Score.....😳

sarge12 — Mon, 19 Aug 2019 19:46:39 GMT

@jazzyvar84 wrote:
The credit specialist at the furniture store just informed me that my loan is actually through Wells Fargo bank because of my credit worthiness. Could this still report as a CFA loan?

I do not think so, Wells Fargo is still a bank in spite of their devious past behavior. CFA is dictated by the fact that the lender is not a bank that is subject to more regulation and usually has stock holders. It is a finance company, that is less regulated by the Government and not FDIC insured.