What Is the Most Accurate Credit Scoring Tool?

by Ciele Edwards ; Updated July 27, 2017
A variety of credit scoring tools exist to calculate credit scores.

If you want to know your credit score, you may be surprised to learn that different companies will provide you with different scores, depending on the credit scoring tool used to calculate the score. All credit bureau-related scoring tools, however, are accurate for their intended purpose.

Types

The two main types of credit scoring tools are the formula the credit bureaus use to calculate FICO scores and the one they use to calculate consumer credit scores. Specialty credit scoring tools also exist, such as the tool credit bureaus use to provide Auto Industry Option scores or to calculate a bankruptcy risk score.

Facts

The accuracy of a credit scoring tool depends on the purpose for which the credit score is used. An Auto Industry Option score works well for a car dealer who plans to finance a vehicle purchase, but is all but useless to a mortgage lender.

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Function

Consumer credit scores are provided to individuals to help them understand their creditworthiness. FICO scores and bankruptcy risk scores are used by mortgage lenders and credit card companies to see how likely a consumer is to make regular payments or file for bankruptcy. The Auto Industry Option scoring tool provides a credit score to car dealers based on a consumer’s history with vehicle loans.

Considerations

FICO scores and consumer credit scores may differ depending on the bureau reporting the score, but this has no bearing on the accuracy of the scoring tool. Discrepancies in credit scores are the result of information contained within each bureau’s credit records.

Warning

Third-party credit reports purchased from any company other than the credit bureaus or myFico.com contain estimated and often inaccurate credit scores because the scoring formula used by the credit bureaus is kept secret.

About the Author

Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.

Photo Credits

  • Image by Flickr.com, courtesy of Casey Serin
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