Know what your credit score really is

SAN FRANCISCO -- If you're shopping for a loan, it's good to know your credit score. The question is, what score?

Most lenders look at a consumer's credit scores to decide whether to grant a loan and how much to charge. Consumers can buy a report on their credit scores, but these scores vary -- sometimes widely -- depending on when, where and how they get them. The scores consumers get can also be different from the scores lenders see.

"There is a pervasive myth that there is one credit score," says Rod Griffin, a spokesman for Experian. "It's quite possible to get very different numbers that can mean exactly the same thing."

Or, the same number can mean very different things.

Credit scores are derived by applying a mathematical formula to information in your credit file at each of the three credit bureaus: Equifax, Experian and TransUnion.

Most large creditors provide the same information about you -- such as loan balances and late payments -- to all three bureaus, but some report to only one or two. The bureaus also collect information about you -- such as bankruptcies, court judgments and tax liens -- from public records. But their collection efforts are not exactly the same.

For these reasons, your credit report -- and thus your score -- can be different at each of the three bureaus.

Your score also can change from day to day as information enters and exits your file.

Even if your three credit files were identical, your score could vary depending on the formula used.

Fair Isaac created the first credit scoring system, and its FICO score is still the most widely used. But its formula is different for home, auto and credit card lenders, and some lenders use newer versions than others.

All FICO scores range from 300 (lowest) to 850 (highest).

To compete with Fair Isaac, each credit bureau has a proprietary scoring system, with its own name and point scale. The three bureaus jointly developed yet another product, Vantage Score, which ranges from 501 (worst) to 990 (best).

A 700 FICO score does not equal a 700 Vantage score, so it's crucial to know what you're getting and to read the educational material that comes with it.

Evan Hendricks, author of "Credit Scores and Credit Reports," says you should get your credit report and score before you need a loan so you have time to correct any mistakes. You also can take steps to improve your score, such as paying down balances.

You can get a free copy of your credit report from each bureau once a year at www.annualcreditreport.com. But if you want a score with the report, you'll have to pay at least $8 for each.

Hendricks says consumers should buy only FICO scores, which will be closest to what lenders use. Here's what you get through various sources:

- The only place you can buy your FICO score for each of the three bureaus is from Fair Isaac at www.myfico.com. The price, including a credit report, is $15.95 a score.

- You can buy a FICO score based on your Equifax report for $7.95 through AnnualCreditReport.com or for $14.95 (which includes a credit report) at www.equifax.com/credit-report-history.

- If you go to Experian, either directly or through AnnualCreditReport.com, you can only buy a Vantage Score. Experian sells Plus scores through its credit-monitoring program.

- TransUnion sells Vantage scores through AnnualCreditReport.com, TransRisk scores through www.transunion.com and FICO scores (for $14.95 including a report) through www.transunioncs.com.

Remember that consumer scores might be different than scores sold to lenders. To see a lender score, ask a lender.

If you are approved for a home mortgage, the lender must show the score that was used unless it was an in-house customized score, in which case it has to show you some score, says Fair Isaac spokesman Craig Watts.

Other lenders don't have to disclose your score, but most will if you ask.

(Net Worth runs Tuesdays, Thursdays and Sundays. E-mail Kathleen Pender at the San Francisco Chronicle at kpender(at)sfchronicle.com.)

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)