1. What is credit scoring? What types of factors go into your score?
2. Are there ways to improve/repair your credit score? Why are credit scores so important? Is there only one “FICO:?
3. What happens if you are denied credit according to ECOA?
4. What happened to credit scores during the pandemic? Underwriting? Do FICO scores accurately capture risk?
5. How are lenders working to reach non traditional high quality borrowers ? What is Lenddo? SOFI?

Credit Scores: What You Need to Know Now
Are you keeping score?
For all the attention they generate, though, credit scores are largely misunderstood. For instance, your precise score matters only when you’re in need of new debt, like a home, auto or education loan or a new credit card, which should be a fairly rare occurrence.

So the score that costs you $15.95 at may not be the score your lender sees. Beyond that, the three credit bureaus— Equifax, Experian and TransUnion— sell their own proprietary scores.
Confused about what to believe? Here are some common myths about credit scores:
My credit score is a good reflection of my financial smarts and good behavior.
Not really. Your score doesn’t reflect your income, employment history or your assets, which should be a part of your overall financial picture. It also doesn’t show whether you pay your rent or utilities on time. As a result, a credit score is less like a report card and more like an SAT score—your results on a particular date that seek to predict your future credit success or failure.
I pay my card off every month, so I must be a low credit risk.
True, your financial habits are excellent. But they won’t affect your score. That’s because the credit bureaus don’t have a clue whether you pay your bill in full or carry a balance on your cards each month. All they know is the amount you owed on your most recent statement.
Instead, the crucial fact is how much available credit you have used. Steve Ely, president of personal-information solutions at Equifax, says you should keep your credit use to less than half your credit limit to minimize the impact on your score.
Taking advantage of reward cards shouldn’t affect my creditworthiness.
Unfortunately, about 30% of your FICO score is based on “credit utilization,” a broad term that includes how much you’ve used of each credit limit, how much you’ve borrowed as a percentage of your total available credit and even how big the dollar balances actually are.
If you’re a rewards junkie like I am, charging groceries, charitable contributions and just about everything else to get points, you may be jeopardizing your score. Based on reports I paid for, my TransUnion score was 11 points lower than my Equifax score, apparently because of my vacation-enhanced balance, even though I used less than 10% of my available credit.
Luckily, there’s an easy solution: Cut back your credit-card use for two or three months before you plan to seek a car loan or mortgage so that your balances will be more modest.
Scored Straight
Credit scores, while crucial to one’s financial health, are widely misunderstood. Some oft-forgotten points to consider:
• They don’t reflect your whole financial picture, but a snapshot of your debt at a point in time.
• It doesn’t matter whether you carry a balance, but it does matter if you pay on time.
• The score you buy isn’t necessarily the score lenders see.
• You don’t need to apply for new credit for credit inquiries to show up on your report.
I was late on a payment, but the debt is now paid off. So I’m good, right?
Afraid not. The single most important factor in your score, accounting for 35% of the total, is whether you have paid your bills on time. One late payment will ding your score for up to a year, very late payments can hurt you for two or three years, and collections and bankruptcies can sting for up to seven years.
What counts as late? In theory, one day. But because credit-card companies know that people move, get sick or misplace their bills, they commonly wait to report your late payment to credit bureaus until about 30 days have passed, or you have missed two due dates. (You will likely be assessed a late fee right away, however.)
If you have missed a payment, pay it as soon as possible and consider calling and doing the honorable thing: groveling. Many companies will waive or reduce fees the first time a good customer makes a mistake, and they may even agree to withhold reporting the infraction to the credit bureau.
Information stays on my credit report for no more then seven years.
That’s largely true for bad news, including late payments. But good news hangs around—and pays dividends—a lot longer. My credit report reflects the 30-year history of the credit card I got back in college.
In addition, closed accounts in good standing will stay on your record for a decade, says Barry Paperno, FICO consumer-operations manager. Both old and closed accounts can help your score because the length of your credit history is another, if smaller, piece of the formula.
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Your credit card behavior affects your overall credit score.

Preserving your credit history is one reason that Kenneth Lin, CEO of, recommends that you don’t formally close an account but let the issuer close it for lack of activity. The longer the account stays open, he says, the more you’ll add to your credit history and the longer you’ll benefit from the additional available credit.
I haven’t gotten a loan in a while, which should boost the “new credit” part of my score.
You don’t have to get new credit to show a so-called hard inquiry on your credit report. If you have opened a new checking account, the bank may have checked your score. Last year, I bought a car and the dealer, unbeknownst to me, checked my credit. I never applied for a loan, but that one inquiry knocked 15 points off my Equifax score—and that’s typical.
For that reason, Curtis Arnold, founder of, suggests you ask up front if a bank, insurer or car dealer plans to check your credit record. Luckily, shopping around for a car or education loan or mortgage counts only as one inquiry as long as you do it within a few weeks. Otherwise, multiple inquiries may knock your score back for a year.
That said, when you check your score, when your current card company keeps tabs on your credit or when someone pre-approves you for a credit-card—all so-called soft inquiries—your score won’t be affected.
The score I pay for or get for free is my real score.
Most free scores are not the FICO scores that lenders request. You can buy FICO scores from Equifax and TransUnion—but not Experian—on for $15.95 each, but even then, they may not be the exact score the lender actually sees. You can, however, see each of your three credit reports—which include all the activity that is used to determine your score, but not the score itself—for free once a year by going to Because your scores aren’t likely to vary by much, ongoing tracking services are usually unnecessary.
I should aspire to a score above 800.
Sadly, a score of 800 or more—the holy grail for “high achievers” on online FICO forums—won’t make you thinner, smarter, richer or more attractive to lenders or anyone else. True, every 20 points in your score can mean a slightly lower mortgage rate or better car loan, but only up to the mid-700s.
That means it’s worthwhile to take steps to improve a score in the 600s or low 700s, and in the high 700s, you’ll have plenty of room for score fluctuation. Beyond that, a higher score is meaningless.

Credit Scoring
Ever wonder how a creditor decides whether to grant you credit? For years, creditors have been using credit scoring systems to determine if you’d be a good risk for credit cards and auto loans. More recently, credit scoring has been used to help creditors evaluate your ability to repay home mortgage loans. Here’s how credit scoring works in helping decide who gets credit — and why.
What is credit scoring?
• Equifax: (800) 685-1111
• Experian (formerly TRW): (888) EXPERIAN (397-3742)
• Trans Union: (800) 916-8800
Why is credit scoring used?
How is a credit scoring model developed?
Under the Equal Credit Opportunity Act, a credit scoring system may not use certain characteristics like — race, sex, marital status, national origin, or religion — as factors. However, creditors are allowed to use age in properly designed scoring systems. But any scoring system that includes age must give equal treatment to elderly applicants.
What can I do to improve my score?
How reliable is the credit scoring system?
If you are denied credit, the Equal Credit Opportunity Act requires that the creditor give you a notice that tells you the specific reasons your application was rejected or the fact that you have the right to learn the reasons if you ask within 60 days. Indefinite and vague reasons for denial are illegal, so ask the creditor to be specific. Acceptable reasons include: “Your income was low” or “You haven’t been employed long enough.” Unacceptable reasons include: “You didn’t meet our minimum standards” or “You didn’t receive enough points on our credit scoring system.”

Your FICO Credit Score: Actually, There Are Many
More lenders are showing customers a FICO score. But recipients need to understand they each have multiple FICO numbers.
Citigroup is among the lenders sharing FICO credit scores with some of their customers. PHOTO: JEWEL SAMAD/AGENCE FRANCE-PRESSE/GETTY IMAGES
June 26, 2015 12:55 p.m. ET
The widely used FICO credit score has become easier to check for millions of U.S. adults.
But consumers can’t assume that the FICO score a lender shows them is the exact same FICO score that lender—or another one—will use in evaluating an application for a credit card, car loan or mortgage.
Most consumers have dozens of FICO scores, and the exact score a lender pulls up depends in part on the credit-reporting firm that supplies it and the type of FICO score the lender chooses to use.
“It’s almost guaranteed that it won’t be the same score,” says John Ulzheimer, president of consumer education at, a credit-management site. That could mean consumers won’t get as good a deal as they expect.
More lenders have been offering many customers their FICO credit score without charge over the past year and a half. Lenders such asAlly Financial, Citigroup and Discover Financial Services began giving out this score under a program launched by Fair Isaac Corp., the creator of FICO scores, in late 2013.
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Getting Access
The score can be seen now by 65 million consumers, a big jump from 32 million late last year and around eight million when the program first launched, according to Fair Isaac, which also is known as FICO.
FICO scores, which range from 300 to 850, have a significant impact on consumers’ ability to get loans and other credit, and on the interest rate they receive. They are used in 90% of consumer-lending decisions, according to CEB TowerGroup, a financial-services research firm.
Knowing their FICO scores can give consumers an indication of whether they are likely to get approved for a new loan. Those with a low score can delay applying and work on improving it. Also, a sudden dive in the score could be a warning that someone has fraudulently opened accounts in his or her name.
More lenders plan to start showing customers their score or expand their offerings. Bank of America will start providing the score to its credit-card users later this year. Private-student-loan lender SLM, also known as Sallie Mae, soon will announce that it will expand its score offering to all its private-student-loan borrowers and cosigners.
Ally Financial will make the score available to all its car-loan customers online next month, following a pilot program that made the score available to fewer than 1,000 customers.
The moves mark a turnaround for a score that until a few years ago was a mystery to most borrowers. Before this program, consumers had a difficult time looking up their FICO score for free. A FICO website has sold consumers their credit scores for years—at a price that currently ranges from $14.95 to $29.95 a month and includes other products, such as credit reports. (There also are options for a one-time purchase.)
In most cases, customers of participating lenders can view their score when they log on to their credit-card or loan account online.
Scoring the Scores
There are many reasons that the score consumers are shown through this program isn’t necessarily the same score that lenders will obtain on them when they apply for a loan.
Many lenders get a score from only one of the three big credit-reporting firms— Equifax, Experian and TransUnion—which is the score they show to customers through this program. (Mortgage lenders are an exception because most pull FICO scores from all three firms.) For example, Sallie Mae and Barclaycard, the credit-card issuer and unit of Barclays, check the score from TransUnion,while J.P. Morgan Chase, which shows some of its Slate credit-card holders their score, gets it from Experian.
If one credit-reporting firm is missing an account that another firm has on the person’s credit report, or one of the credit reports has an error on it, that can affect the credit score the firm provides the lender.
Secondly, FICO has released many updates to the score models over the years, and some lenders still use earlier versions. While many lenders use FICO 8, a score the firm launched in 2008, in evaluating applications for credit cards and some other consumer debt, most mortgage lenders use an older version.
There also are different types of a single FICO score. The “base” score predicts the risk of a borrower falling behind on payments on all types of loans.
Most car-loan lenders use a FICO “auto score” that more heavily weights prior experience with car loans. Borrowers who previously had a car loan and made their payments on time could end up with a higher auto score than base score, says Jim Wehmann, executive vice president of scores at FICO. The same setup exists for credit-card lenders, some of whom use a “bank card score.”
Mr. Wehmann says FICO requires the lenders showing scores to disclose the credit-reporting firm they receive these numbers from, the score version and the specific type if it isn’t a base score.
Lenders, for their part, point out that the score they show consumers is the one they actually use when making decisions on existing accounts.
Nearly 200 million consumers in the U.S. have FICO scores, according to the company. Most of them each have at least 60 FICO scores, Mr. Ulzheimer says.
FICO doesn’t dispute that but says the number of scores being used by lenders in most consumer decisions is far smaller. Each of the three credit-reporting firms has six or seven FICO scores per scorable consumer that collectively account for 95% of the FICO scores that were pulled in the past year by lenders, Mr. Wehmann says.
In most cases, all of a consumer’s FICO scores should be in the same ballpark—generally not varying by more than 25 points—and the score differences shouldn’t change a lender’s decision to approve a borrower, Mr. Ulzheimer says.
But varying scores can affect the interest rates a consumer is charged. As of Thursday, borrowers with a 720 or higher FICO score got an average 3.183% annual percentage rate on a 36-month car loan for a new vehicle, compared with a 4.546% APR on average for borrowers with a score between 690 and 719, according to Informa Research Services, a market-research firm.
Write to AnnaMaria Andriotis at


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