Credit Score gap between Loan officer and Zendough

For the co-op board application, the Managing Agent will do their own credit check & will use whatever bureau or Tri-Merge etc. I highly doubt that they will just take some credit score that you give them.

The lender may be using it's own proprietary algorithm to generate a credit score. The are multiple different ways of calculating a score not just Fair Isaac's FICO methodology. The bank may do this simply to avoid paying FICO but it is more likely to do this to weight different factors according to how they think this translates to a riskier mortgage. e.g. have you previously been late on mortgage payments while being current on a credit card?

As Sammy notes, the co-op board will likely do their own check and that's more likely to correlate to what you see via Zendough.

>The lender may be using it's own proprietary algorithm to generate a credit score. The are multiple different ways of calculating a score not just Fair Isaac's FICO methodology. The bank may do this simply to avoid paying FICO but it is more likely to do this to weight different factors according to how they think this translates to a riskier mortgage

Many do.
And not only the banks - the credit reporting companies don't use FICO. The score from "zendough" isn't a FICO score.

@777: quick background on credit bureaus, lenders & FICO. The credit bureaus house raw data such as public records, payment history (e.g., late payments) and current debt and utilization. Originally each of the bureaus had a geographic specialty but these days they mostly cover the same population – the entire adult US population. The Fair Issac Corporation ("FICO") developed a score that relies on this raw data and produces a number from 350 to 850 and represents a kind of general credit-worthiness. This is why everyone has three FICO scores: an Experian FICO, an Equifax FICO and a TU FICO.

When you apply for credit, the lender will pull your bureau (maybe one, maybe all three) and they will also get the FICO score (or scores). Lenders mostly rely on their own specific proprietary risk score as opposed to FICO. FICO is "all purpose"; proprietary models developed for specific industries such as credit cards, mortgages, auto, leasing are each more accurate in their own line of lending. Typically, FICO appears as an input the ultimate proprietary risk score.

Now consider who pays who. The lenders pay the bureaus and bureaus pay FICO. For a long time the bureaus have been trying to cut FICO out of the picture and develop their own credit scores. Experian has the "Plus Score"; Transunion now has the "Zendough score". For a while they worked together on a combined three-bureau score. The fact is all of the scores developed by the bureaus have been flops in eyes of the lenders. But this has not prevented them from marketing them aggressively to consumers, often with a teaser rate. [This practice is very dubious… look for legal action from the new CFPB against the bureaus.]

So, to your questions:

>> “Now, my mortgage loan officer at a large bank cites a credit score that is on average lower by 50 points (not just the mid-score but each one of them). Does anyone know why there could be such a discrepancy?” Your loan officer is almost surely quoting your three actual FICO scores. Confirm with him/her.

>> “Also, can I use my Zendough's score (as it's verified by TransUnion) as my credit score when applying to a co-op board, instead of using mortgage lender's credit score? “ No, sorry to say but it’s worthless. The managing agent is going to look at your FICO score and more than that they will look at underlying raw bureau. Sometimes this can help you, as an example it’s well known that minor medical derogs (late payments) with drag a FICO score down but are not very usefully in predicting much of anything.

BTW As result of recent legislation you CAN access your 3 FICO scores once per year for free at MyFICO.com (and more often for a fee).

any building is also going to do its own credit pull on you, so even if you say in your cover letter "I have a credit score of 800," they'll run their own report. How thorough that is will depend on the co-op.

ali r.
DG Neary Realty