How Accurate Are Credit Score Estimators?
Did you try Bankrate's score estimator when it was featured on the Consumerist two years ago? I did and I wondered how accurate that 12-question quiz was. Answer? Not bad.
I review a lot of services on my personal finance site and one of the recent tests I did was to check the accuracy of credit score estimators. Credit score estimators ask you about a dozen general questions to assess your creditworthiness and try to guess your credit score. It sounds ridiculous that it takes fewer than twelve questions to make an educated guess on your score but most estimators are that brief. But how accurate are they?
For this test, I retrieved my real credit score by signing up to myFICO, a credit monitoring service offered by Fair Isaac Corporation, the creator of the FICO score. They pull a real Equifax credit report and calculated a FICO Equifax credit score. My actual Equifax FICO credit score was 794.
myFICO's Credit Estimator tool, which is the same as the Bankrate score estimator featured here two years ago, guessed that my credit score was between 725 and 775. Not bad. CreditKarma, a site that offers your TransUnion credit score using a TransUnion credit report, determined my score was 721. (The credit bureaus say that scores can vary up to 50 points between different bureaus)
The verdict? The estimators are accurate enough if you're simply curious roughly how good your credit is (this is, of course, based on a sample size of 1). Considering they're free and so quick to use, they are quite effective at giving you a ballpark number. If you're planning on getting a mortgage or a car loan, you may want to get an actual credit score so you know exactly where you stand and whether you need to improve it to get a better rate. You can do this one of two says:
- Apply for the loan and then ask the lender what your scores are: When you apply for a loan, the lender will pull your credit scores. You can simply ask them what your score is. The downside to this is that the inquiry will be a hard inquiry, resulting in a loss of a few points, and you won't be able to do anything to improve your score even after you find out what it is because you won't have enough time.
- Sign up for a bureaus' credit monitoring service: Each of the bureau has a trial service that gives you a free FICO credit score. You'd have to sign up, get your score, and then cancel or they will begin billing you something like $15 a month for their service.
If you're simply "curious" about your score, an estimator is good enough. And remember to regularly check your credit reports using AnnualCreditReport.com because your score is based on the information in your reports and your report may have errors.
If you know your credit score and have used the estimators, how has its estimated score compared to your own?
Jim writes about personal finance at Bargaineering.
(Photo: samwilkinson)
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Comments:
@KyleOrton: FWIW, my Credit Karma was only 14 points off. I'm sure it's wildly different for different folks, and my credit report hasn't been very active, so to speak. But at least my Credit Karma was lower than what my score actually was. (shrugs)
I used to work for a consumer credit repair law firm in the research & development department. I have used the Bankrate estimator on HUNDREDS of credit reports where I know what the actual score is and I have always felt is is very accurate. Usually within 20 points of the range given. Of course, we don't know if their estimator is considering the FICO '08 changes that weigh certain types of accounts better or worse than others. A lot has changed in credit scores lately.
I just did this and it gave me an estimated score of 730 - 780, whereas my actual FICO score recently was 811. I guess it's better that the estimate is a little low rather than a little high. You won't get any unpleasant surprises applying for a loan.
I dont understand why our credit scores cant be public information for us to monitor.
Why should I have to pay $15. a month?
What are the downsides to being able to check your score yourself?
I think the credit industry including the abuse of the credit score is what got us into this mess . If there's money involved to expect accuaracy or fairness from most of they sgencies and ancillary businesses is fruitless .
The credit score people are an industry on to itself . They were able to perpetuate their contrived self importance . Why ? - money and jobs for everyone involved .
You'll only get a FICO score from myFico.com. You may also get a Fico from Equifax. You won't get a Fico on TransUnion's site, and you won't get a Fico from Experian period as they ended their agreement to offer Fico scores.
The links you provide in your blog post that you linked to include links to Credit Check Total, Privacy Matters 123 and FreeCreditReport.com. NONE of those offer FICO scores, though they do offer their own fake scores, which are NOT worth paying money for.
Credit Karma is fine for that purpose, but it's not a Fico, it's a propriety Transunion score.
Very sloppy. Stop calling every stupid credit score out there a Fico, because they're not Fico's, they're a waste of money.
Well I've just compared Credit Karma and Bankrate estimators and Bankrate gave me a range of 80 pts while Credit Karma gave me an actual, singular estimate. I lean towards the accuracy of Credit Karma since the number they gave me was smack in the middle of the Bankrate estimator. That puts me +/- 735 :)
@u1itn0w2day:
Back in 08 I was about to buy a ton of Citi stock. The stock was "undervalued" in my opinion. I applied for a student credit card and listed my assets at $10 K on the application. They declined me for a lack of a credit score. I than called the call center and they told me that they did not do any underwriting and the approval was based only on my score. I did not buy the stock because I don't think credit scoring system is any good and that saved me $600.
@dandubois:
There is no downside to knowing your credit score, but you don't get it for free because it is an ESTIMATE of your credit-worthiness made by a PRIVATE company in business to make money. The service they provide is making an estimate... giving it to everyone for free as public information would clearly not be profitable to them.
Does checking your credit with something like Credit Karma cause a ding to your credit like a regular inquiry?
creditkarma.com
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70 points isn't a small difference, it can straddle the line between good and excellent credit and make a big difference on a loan.
True, but at least they're under estimating your score. Those 70-80 points will set you up for a pleasant surprise when you get to the actual mortgage.
Estimated 680-730
Actual 701
I'm impressed
Credit scores are not trend data. They are the result of an instantaneous snapshot of the credit bureau's data that second. As such they can be manipulated. Pay all credit card balances to zero just before you run a score. Vary your credit between a credit card, a dept store card and a car loan. You can check your own credit without a loass of score but take two or three months to go car shopping and let every dealer check your score and you will loose lots of points for lots of hard checks (unless you do thim all about the same time, then they count as one}. Don't close or remove old accounts. Though FICO is the big name in town it means nothing when you are buying a house or a car as generally a reseller with a different model will be used. Go to MyFico.com and use the "what-if" software to see what actions can impact your score and how much. Get a copy of each report and clean up every error you find including DOB, former addresses, etc before applying for credit. Put a Security Freeze on your records to stop most Identity Thefts.
Credit Karma shows you how you compare to all users, users in your age range, etc.
If you want to see how good/bad you're credit is, it tells you what percentile you fall in and you can see how you stack up. This is a really good indicator of your credit health.
Up here in cold Canada we can get free credit reports from our 2 main credit checks. It does take 3 business days to be mailed or instantly online for 15$ but i choose to wait 3 days.
Sorry Jim, But the score you paid for is just as likely to be wrong. I paid for a service that supossedly told me my credit score (TrueCredit) and when I went for a cafr loan, it turned out that the service that I paid for was simply wrong. Worst of all, TrueCredit is a subsidiary of Transunion, and it didn't even get my Transunion score correct.
@Andrew Farris: I think dandubois is saying we should know our OWN credit score, not others. Thus, the company still can make their profits. I can see that it is their professional assessment, however, their assessments can and do ruin lives. If they make a mistake (and they do), then we should be permitted to access our score to filter out their mistakes. Remember: their mistakes hurt us much more than it hurts them.
Also, one big reason they may not want to make access too easy is that they don't want all the problems exposed. Correct me if I am wrong but they currently ignore credit theft, treating it as the consumer's problem. If 2 or more names are assigned to a SSN, no one is notified even though a crime may be (and probably is) in progress. If credit access was too easy, the game would be over.
The estimator was reasonably accurate for me. It gave a range of 760-810. I checked my score with all three agencies a few months back and I fall smack in the middle.
I was concerned that it didn't have any questions related to student loans, which were simply lumped into total non-mortgage debts. Still, it pegged my score where it should be and my score is pretty high.
If your credit is over 700 it is much easier to be "accurate". The issue comes much more with those who have other things on their credit report
I still do not understand why I need to pay for my credit score. Also I do not have faith in any place that wants me to pay $90 per year (myfico).
Paying for your credit score is the same as putting a dollar in your car everytime you use it. It is yours there is no reason to pay for it.
I suspect nobody will ever read this, but has anyone else noticed that knowing your credit score doesn't matter? Yes, you should know what's on your credit report and, of course, clear up any discrepancies. But knowing the number doesn't make any difference. Why? Because lenders are the only ones who need to know what your number is, and they all make different decisions for what number they'll be willing to accept. I'll repeat: Each lender's minimum score is different. It's not like having a 725 is going to qualify you for EVERY lender. Those decisions are always private. Have you ever seen an advertisement for a loan that said what your minimum credit score must be? No. Furthermore, even if you knew that your credit score was high enough to be considered for a particular loan, and suppose that there were some problems on your credit report. Would you not care about the problems on your credit report just because you already qualified for the loan? No, you'd fix your credit.
The number doesn't matter.
I recently got my score when applying for a mortgage. My actual score was at the high end of the 50-point range I just got from Bankrate score estimator.
I received all three of my scores when I get a mortgage preapproval last month and Credit Karma wasn't even close.
Like Jim here, Credit Karma was 70 points lower than any of the real scores (including TransUnion, but I didn't recall which Credit Karma used at the time).
70 points isn't a small difference, it can straddle the line between good and excellent credit and make a big difference on a loan.