How Reliable is an Instant Credit Score?

Online consumers can choose from any number of sites that promise an instant credit score. While keeping track of one's credit score is always a good practice, not all credit scores are created equal. An instant credit score website may provide a credit score that is different than the score used by bankers and other creditors to make determinations about mortgages, loans, credit cards, and other credit products. As a result, the instant credit score available on a website may not be reliable, and can give you a false understanding of how lenders perceive your creditworthiness.

A credit score is a three digit number that represents a consumer's credit history. By looking at a credit score, a lender, employer, or landlord can make a quick decision about extending credit, a job offer, or housing to an applicant without having to spend a lot of time reviewing that person's credit report. There is no one single source of credit scores. In countries where credit scores are used, the score may be generated by a single credit reporting agency, or there may be multiple organizations that have their own version of the credit score. For example, in the United States, the best known credit score is produced by a company called FICO, yet the three major credit bureaus — Experian, TransUnion, and Equifax — each offer their own credit scoring system as well, and large banks may likewise have a proprietary scoring system for internal use.

Because there is no one single credit score for each consumer, the reliability of instant credit score sites has been questioned. It is not unusual for a conscientious mortgage applicant to look up his credit score before visiting the bank, only to be told by the loan officer that his score is actually very different than the one offered by the instant credit score website. While the applicant may assume that he was given a fake credit score by the website, chances are that the website purchased his credit score from a different source than the one used by the loan officer.

To determine whether an instant credit score has any value, a consumer would do well to find out both the source of an instant credit score as well as the credit scoring system relied on by a specific lender. If a consumer knew that he was going to be applying for a car loan, he could ask the bank or the dealer about the source of their credit scores and reports. He could then order his score from that source so as to have a better idea of what the dealer or lender will be looking at when making a credit decision.