Every month there is at least a handful of posts here that include erroneous perceptions, opinions or information about credit.
This thread is intended to address questions and facilitate discussion about credit reporting, credit scoring, and any other general credit-related matters.
All credit questions, and all informed opinions and answers, are welcome.
To get the thread started, here are a couple of items that come up on LH from time to time.
How does my income impact my credit score?
A credit score is generated from the data that is reported to your credit file with one of the credit bureaus. Your credit reports do not contain salary/income information.
Why is the credit score that the dealer pulled different from the one I got from [Credit Karma, my credit card company, etc.]?
There are dozens and dozens (if not hundreds) of credit scoring models, and they all calculate scores based on different algorithms that measure and weight various attributes of your credit file differently.
When you apply for credit the lender uses a credit score to measure the risk of defaulting on that particular credit transaction, and there are scores that specialize in predicting risk for specific types of credit.
It isn’t particularly useful for an auto lender to know how likely you are to default on a mortgage, which is why many auto lenders use auto-enhanced FICO scores.
Next, sources like Credit Karma give away “educational scores,” which aren’t used by a meaningful number of credit grantors to make credit decisions. The most common type of educational score is the Vantage Score.
It doesn’t do you any good to know that your TransUnion Vantage 4 is 744 when the auto finance company is using a TransUnion Auto-Enhanced FICO 8 – and yours is 607.