When you apply for a mortgage loan, the lender will pull all three credit scores and your mortgage loan interest rate and whether or not you are approved for the loan at all will be based on the credit score in the middle. For example, if your three credit scores are 750, 720 and 680, the mortgage lender will use 720 to evaluate your creditworthiness.

When you apply for a new credit card or auto loan, you don’t know which credit bureau(s) the lender will use to obtain your credit score. Perhaps Auto Lender A subscribes to Experian while Auto Lender B subscribes to Equifax and Auto Lender C subscribes to all three. Smaller companies subscribe to just one of the three major credit bureaus while large corporations usually subscribe to all three credit bureaus.

You never know which one of the credit bureaus will be used to approve your application for financing, housing, employment, phone service, cable service, electric service, etc., unless it involves a mortgage loan. This is why to get the most accurate picture of your creditworthiness, it would be wise to find out what your FICO credit score is with all three credit bureaus because your credit score with each credit bureau can vary dramatically and you never know which credit bureau(s) a lender will use to evaluate your creditworthiness.

Variances in your FICO credit score at each credit bureau can also be caused by the particular mix of account types being reported to that agency. For example, your mortgage lender might report your loan history only to Experian, your auto loan finance company might subscribe to Equifax and TransUnion, while the personal loan you took out might be reported exclusively to Equifax. Some of your accounts might not be reported at all. If you examined your Equifax, TransUnion and Experian credit reports, you might find that one agency has a significant amount of data about you while another has very little. These factors can result in a significant variance in your FICO credit score from one credit bureau to another.

Editor’s Note:

We at Jewelry Outlet always want to remind our customers why it is important for them to obtain and responsibly use credit. One helpful way to improve one’s credit is by adding a trade line and then only using a small portion of the trade line. This is an example of utilization, which is 30% of the credit score calculation. Thus with a top score of 850, the utilization category is 255 points of the total credit score (850 x .30).

If someone had one department store trade line of $500, but had maxed out the trade line by charging $500 of goods and services, then this person would lose almost all of the 255 points (out of 850), having a very high utilization of 100%. Thus assuming all other things on the person’s credit report were good, the highest credit score this person could achieve might only be 595 (850 – 255), as this person might lose all points for having a high utilization.

But if this person obtained another trade line (maybe a jewelry store account) for $5,000, now the person’s utilization would be only 9% ($500/$5,500). Thus this person’s credit score would increase, maybe by as many as 200+ points, possibly bringing the score up to over 800.

The person’s interest rate on an auto loan with a 595 score might be as high as 20%, whereas the interest rate with an 800 credit score might only be 2% to 5%. If someone purchased a $20,000 car, the lower interest rate would save $250 per month, for having good credit and low utilization.

This is the power of low utilization. And this why it is important to obtain a jewelry store trade line with a high limit.

Jewelry Outlet is the number one online jewelry retailer to help you enhance, establish and/or rebuild your credit. We offer easy credit terms for people with bad credit, new credit and no credit. Click here to Apply for Credit

Posted by Christian C Culpepper