Credit Monitoring Dirty Secret – Educational Credit Scores

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Credit Monitoring isn’t all it is cracked up to be.  The cost seems to be minor ranging from $15-20 per month.  We all know credit scores are important and we want them to be high, but I wanted to show you what you really get with these services, EDUCATION not your true FICO score which is what the loan companies use. Credit Monitoring is Big Business and I will explain more for you.

Credit Monitoring Dirty SecretsMany people have opted to keep a closer watch on their credit scores throughout the year.  They can do this for free via, (site is not run by the government – watch out for the ads and don’t pay for anything)which allows people to access a credit report from all three main credit reporting agencies for free once per year. You won’t get a FICO score here though. The three main credit reporting agencies are the following:

Many people will opt to receive a credit report every four months; this way, they can gain a report from each agency for free throughout the year.  However, in this turbulent economy, more and more people are opting to pay for credit monitoring services that will keep track of their credit scores at all times and alert the person if his/her personal information or credit history is accessed.  These credit monitoring services will charge a monthly subscription fee to do this, something that often surprises many people because, usually, the service begins as a free trial, though most people don’t know that it is a free trial until after charges start appearing on their credit card bills.

Credit Monitoring Scores Usually Don’t Match the Bank’s Credit Score Report

What’s more surprising to these people, however, is when they go to apply for a mortgage, car loan, credit card, or other financial product that requires a credit check, they discover that the credit score on file for the person does not match what the credit monitoring service has on file.  Of course, the lender of the financial product is going to use the score that the lender has on file, and often, it’s lower than the score that the credit monitoring service has on file.  As a result, the person will get a higher interest rate than he/she might suspect.

Credit Monitoring Services Sell Educational Credit Scores

The problem lies in the fact that nationwide credit reporting agencies and credit monitoring services sell credit reports to consumers, lenders, and other businesses.  These credit reports are known as “educational credit scores,” which are to be used by people to help identify possible identity theft and to help them gauge what types of interest rates they can expect to pay on loans they take out for their homes, cars, and credit cards.

Only Credit REPORTING AGENCIES sell True Credit Scores with FICO the Financial Institution will Use.

Conversely, credit card providers, insurance companies, landlords, auto loan companies, and mortgage lenders buy credit reports from credit reporting agencies.  As with the groups mentioned above, these groups will use this information to determine your creditworthiness, including how likely you are to pay your debts on time and how likely you are to pay them at all.  However, these reports often have varying scores from the “educational credit scores.”

You’re probably wondering why they would vary- after all, if these scores are to gauge your creditworthiness, shouldn’t there be one general number that defines your creditworthiness rather than two or more numbers?

Credit Monitoring Services Comparison – All Report Different Scores

Unfortunately, two or more numbers can often result because of two main factors:

1. There are discrepancies in each reporting method.

2. There are different scoring models in each reporting method.

The result is that differing numbers can result.  When it comes to discrepancies in the reporting method, these can include the following factors:

Accuracy – When your personal information changes (such as you getting married and taking your married name), the information has to be matched to the correct credit history file.  If this information is missing, the credit score will differ as a result.

Consistency- All data suppliers are not giving the same information to all of the credit reporting agencies. Often, one of them will have information that the other two won’t, thereby influencing the scores.

Privacy - Making matters worse, credit reporting agencies do NOT share information with each other; therefore, if one agency has information that the other two doesn’t, those two won’t get that information.  Even worse, they won’t even know that something is missing- it’s your responsibility to ensure that your credit history is accurate across all agencies.

Timing - If the data suppliers do provide the same information to all agencies, they may not provide that information to all agencies at the same time.  There could be a difference of several weeks or even months before the credit reporting agencies are reporting the same information about your credit history.  (

When it comes to discrepancies in the scoring models, there are three main types:

Custom Credit Scores – This score will predict a debtor’s performance based on a company’s own mathematical formula of specific credit products weighed against the creditworthiness of other people in its database (i.e. how risky this person would be against other people who are already customers).

Generic Credit Scores – This score will predict a debtor’s general payment performance. These are the scores that credit monitoring services provide you with to give you a general idea of how your credit history is and what type of interest rates you might be expected to pay for mortgages, car loans, credit cards, and more.

Industry Credit Scores- This score will predict a debtor’s performance based on a specific type of credit by industry.  For instance, if you have been behind on your mortgage payments, your interest rate for taking out a second mortgage may be considerably higher than the interest rate for taking out a car loan or opening a new credit card account if you’ve never missed payments on your car loan or credit card(s).

As you can see, there are many variables that can go into a credit score that is reported.  The biggest problem is that credit monitoring services only provide you with a general credit score that may or, often, may not be exact or even close to what an industry or a company will use as a credit score.  As a result, your credit score could be much lower in the eyes of the financial institution you are wanting to get a loan from, resulting in a higher interest rate and more costs.

This calls into question if credit monitoring services are really worth the money each month.  While the services can give you a general idea of your credit history and help you to determine if your credit history is being accurately reported, you can do that essentially yourself for free via  I would recommend skipping the credit monitoring services, most likely the money could be better spent elsewhere.

Check out some other sites on the web.