Experian Down Plays Credit Scores! Incredible!

David A. Szwak

Experian Down Plays Credit Scores! Incredible!

Postby David A. Szwak » Sun Dec 18, 2005 7:59 pm


Risk scores
My first piece advice when talking about risk scores has nothing to do with the risk score number. The first thing you should do is get a list of the risk factor statements that most affected the score at the time it was calculated.
The second thing you should do is get a copy of your personal report directly from Experian and review it.

As you look over the report, compare the information in it to the risk score factors provided by the lender. Doing so should give you a much better feel for what information in your credit history is affecting the risk score models. Addressing those issues puts you in control of improving your creditworthiness and, therefore, the risk score.

For immediate access to your credit report and score, order online. Select the consumer credit product that best meets your needs. And yes, you should get your personal report from the other two credit reporting agencies.

Risk scores not part of your credit report
Now, about the risk score numbers. You won't find them on your personal credit report because they are not part of your credit history. They are an analysis of your credit history and are calculated by the lender, or at the lender's request, when the report is sent.

Often, risk scores are printed by the lender along with the credit report, so it appears the scores are part of the report. Unfortunately, this has resulted in the misperception that risk scores are part of your credit history just like an account. They're not.

Many models, many scales and meaningless numbers
There are many, many different models that analyze risk for a wide range of credit decisions. General creditworthiness and bankruptcy risk are two examples. There also are models specific to mortgage lending, auto lending, credit card decisions and other industry-specific and lender-specific requirements.

There is an equally diverse number of scales for those various risk analysis models, so a number alone doesn't tell you anything. On one model a high score is best. On the other, the lower the score the better. If you go to a credit reporting agency and ask, "I got a 745, what does that mean?" the representative will tell you they don't know. What model, what scale, and how does the lender interpret the model are all questions credit reporting agencies don't have answers to.

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