Myths: Who uses credit scores?
Myth: Only banks and lenders use credit scores.
Fact: Banks, credit card companies, and other lenders use credit scores, including VantageScore credit scores, to assess a borrower’s loan eligibility and set loan/credit terms.
Some types of credit scores are also used by other entities like insurance carriers to help predict losses in order to accurately price home and auto policies. This means that a consumer would be more likely to pay a fair policy rate and not have to subsidize the cost for higher risk policyholders.
Additionally, landlords may use credit scores, to determine if they want to enter into an agreement with a consumer. The better a credit score, the more likely consumers will receive favorable terms.
Myth: Credit scores are used by employers.
Fact: Credit scores are not used by employers, however in some states employers may use information in a prospective employee’s credit report. Employers use a special form of credit reports that hide social security numbers, account numbers, and other personal information that is not pertinent or allowable in the employment screening process.
Myth: There’s only one credit score model used by lenders.
Fact: Actually there are dozens of credit score models that are used by lenders. Some scoring models, known as “generic” credit score models are like the VantageScore credit scoring model and are sold to lenders and consumers. Lenders also use “custom” scoring models developed internally to suit their specific lending strategies. Generally speaking, all generic credit scores are interpretations of your credit report. The source of your credit reports are Equifax, Experian and TransUnion.
Myth: Anyone can submit information to credit reporting companies about me.
Fact: There is a rigorous process that data furnishers go through in order to be able to report data to the credit bureaus. Data furnishers are audited in order to be sure information is as accurate as possible.