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Krothnetworker

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Why the difference in Credit Scores and how it affects Auto loan eligibility
Hello everyone,

Today i went out to buy a car for my dad confident that my credit was good enough to get a descent deal. I've had a good standing credit history for about 4 years, never missed a payment, and kept a relatively low balance on my cards (From 9-15%). As a result I had scores of over 730 on Credit Karma's site and to me that meant that the Car Dealership would agree to finance me a vehicle around $26,000. However, I was told by the employee that because I was a first time buyer and had no previous history with Loans, Mortgages, etc. To my surprise i found out today that there are different Credit Scoring agencies like Equifax, Transunion, Experian that each will score you differently. Not only that but that AutoLoan companies and banks will have different "Scoring Models" that will determine your credit score and eligibility. I was surprised to find out when they ran my credit that i only scored a 701 on their system (30 points lower) and that i had only been approved for a $10,000 deal on used cars.

My question is why is there different Credit bureaus, and why do their scores differ? Is there different credit scores for every type of credit-related application? F.e Mortgage, Auto-loan, Personal-loan, etc? Is there any way i can be sure of what i am eligible to receive? Thanks in advance.

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There are more than just your credit scores that factors in how much you will be approved for a loan or any types of credit really, You can have 800 scores but only makes 20k a year, it would be difficult to get 30k loan, opposite holds true as well, if you only have 650 score but makes 100k a year? It would be much easier to get that same 30k loan, given both have relatively similar amount of debt.

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Yes, there are industry specific credit scores, like auto/mortgage/credit cards. Some lenders now days have their own internal credit/risk/performance scores, we have 100s different scores out there, so before you quote or compare credit scores? You need to find out exactly which scoring model it's based on, not all credit scores created equally, some of score models can go up to 900 or only goes to some odd numbers like 843. The credit scores provided here is from VantageScore 3, before around 3/2015 it was VantageScore 2 that goes up to 950 or 990 I can't remember lol.

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Credit scores are big business and it was designed for lenders, so to keep their score current and their bottom line up? They, mainly the FICO would come up with new scoring models every so often to keep their scores relevant and to reflects then current financial climate, we as consumers end up with 58 different FICO versions to date and much much more are available for lenders that we arent prevue to. Everyone wants slice that pie, everyone and their mom start their own credit scores models in hoping getting little piece of that pie, even the Credit Bureaus and their so called credit monitoring services, it's more or less just a money grab. Oh, there are more than just three credit bureaus, Google LexisNexis, if you had applied for fishing license 20 years ago? It might be on there, some even reported that it even shows how long they spend on certain shopping sites, you want talk about intrusive and just freaking creepy.

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Focus more on your credit report than credit scores, there are way too many scores out there but one common theme is that they all based on what's in your report. Your scores between any two models maybe 50 points but it dosent automatically means lower the two scores would consider to be bad, lenders would adjust their lending requirements according the model it uses. Because you can't really have exact same score requirements when one score model goes to 843 and all in while another goes upto 950, and both models could be used by same lender but for different credit products.

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Credit Karma's expressed purpose for being here is to TEACH how credit works and show how to build a good credit score, and it does so very well in the articles and interactive financial tools on this site.  My score has risen considerably and I bought a new car last year.  I strongly suggest taking the time to read the articles so you can benefit as I have.  BTW, I'm retired, on a fixed income, and doing better than when I was working because of what I have learned here.

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