“We are doing what?” was the elevated response from a vice-president of a major credit card company. She had just discovered that her employer was providing a simulated consumer credit score to their clients, while using a lender’s FICO® credit score to approve credit cards for their clients. The two scores are always different. Lenders want to demonstrate that they are trying to educate their clients about credit scores by providing them with an unrelaible "non-lender consumer" score. However, For example, Tom’s lender provided him a score of 803, while his Classic FICO® score was 711. That’s a big problem which such lenders don’t want you to know.
Why do lenders do this to consumers?
Hundreds of lenders will provide their clients a “consumer credit score” (such as Vantage Score) while using a FICO credit score to approve their loans, mortgages, and credit cards. This blog has previously highlighted the differences in the two scores – it can be startling. Look at “The Differences in Credit Scores”.
Why do Lenders Provide Misleading Information?
First, lenders want you to feel that you are getting something of value from them – even if they do not provide you with the same credit score for loan approval. Most of the time, lenders won’t let you see their FICO score so you will not know there is a difference between the one the lender discloses to you, and the on they use for credit card / interest rate approval.
Second, it usually does not cost lenders anything. Providing FICO scores to consumers can cost lenders a lot of money. Providing Vantage scores cost lenders little-to-no money. So, many lenders can disclose to you a non-lending credit score such as the Vantage score, and then check your FICO score when you apply for a loan or increase a credit limit. As the same vice president of a major credit card company said, “That is bait and switch.”
What lenders do this?
There are many. Here are a list of some of them:
Capital One
American Express
Chase
USAA Bank (Has recently stopped doing it)
One Main Financial
US Bank
Wells Fargo Bank (Has recently stopped doing it)
I would not track your credit scores through such entities.
Why is My Credit Plan so important to you as a consumer? It provides the same Classic FICO Scores used in all mortgage, and by most auto and credit card lenders. This is where you can get the correct information. This is also why there is a small cost associated with providing you with the correct information / scores.
Don't you want to know the actual scores used by lenders? Most people would.