Same Formula but Different Data Can Affect Credit Score

Question: While I was refinancing my mortgage recently, my bank pulled credit scores from three sources. The scores were referred to as Beacon Score, Fair Isaac Model Score and Empirica Score. My Fair Isaac was 775 while my Empirica was 776. However, my Beacon was 608. Fortunately, this did not affect the rate I’m receiving for the refi, but I was surprised that there was such a discrepancy between Beacon and the other two. Is that unusual? Do they each have their own formula for determining your score?

Answer: All three credit bureaus use the FICO credit scoring formula created by Fair Isaac Corp. They just call it different things. At Equifax, it’s the Beacon. At TransUnion, it’s the Empirica. At Experian, it’s called the “Experian/Fair, Isaac Risk Model.”

The scores are based on the information contained in your credit reports at each of the three bureaus. Because the bureaus are private companies that don’t typically share data, your reports can be different at all three -- sometimes extremely so. Equifax probably has some negative information about you, such as late payments or a collection action, that the other two bureaus don’t have.

As you discovered, the effect of negative marks at just one bureau is minimal when getting a mortgage. That’s because most home lenders focus on the middle of your three scores and disregard the other two. (If you’re applying for a mortgage with another person, such as a spouse, it’s usually the lower of the two middle scores that they use to evaluate you.)

Where this negative information can hurt you is when you apply for credit from a lender that consults only one bureau -- and it happens to be the bureau that has the bad marks.

Order your Equifax credit report at www.equifax.com and see exactly what the trouble is. If the report contains errors or entries that don’t belong to you, ask Equifax to investigate and eliminate them. Once you’ve done that, check out your other two reports as well, just to make sure everything is accurate. As a general practice, you should pull your reports at all three bureaus at least once a year, and again a few months before you apply for any major credit, such as a car loan or mortgage.

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This Estate’s Division

Is More About Duty

Q: I am one of six children. Our father died without a will, leaving us a dilapidated house to sell, splitting the profit. Some of us wanted the house sold “as is.” Others wanted to have lots of repairs done first to raise the value of the place. My oldest sibling decided that whoever did not contribute time and money to fix the home would receive a lesser amount than the rest when it is sold. I can’t really afford the time or money and I find this unfair. Do I have rights to an equal share even though I cannot contribute? Let me also state that for the last eight years, my siblings for the most part would not speak to my dad and they didn’t give a hoot about him. While he was in the hospital dying, my siblings were ransacking his home. I sat by his bedside and cried.

A: Condolences on the loss of your father. But it’s hard to see how your siblings’ solution is unfair, unless they propose to give you less than you would have received had the repairs not been done.

Let’s say the home is worth $60,000 as is. Your share, if the proceeds were split evenly and we don’t factor in selling costs, would be $10,000.

With the investment of a little elbow grease and few thousand dollars, however, the home’s fair market value might be boosted to $90,000. Your siblings who participated in the rehabilitation could fairly give you the $10,000 you would have gotten anyway and then split the remaining profit among themselves. (This division process could be tricky, because they’ll have to consider both time and money contributed, but that’s their problem.)

This really isn’t about the money, though, is it? It’s about who was the most dutiful child, who should have been rewarded the most and who behaved abominably as your father lay dying.

Those, however, are not issues that can be reasonably addressed through a division of your father’s estate, particularly when he didn’t care enough about what happened to bother writing a will. You could go to court to try to take over administration of his estate, but you may not succeed and it’s doubtful the effort would be worth the financial and emotional cost.

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Liz Pulliam Weston is a contributor to The Times, a columnist for MSN Money and a graduate of the personal financial planning certificate program at UC Irvine. Questions can be sent to her at asklizweston@hotmail.com or mailed to her in care of Money Talk, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012. She regrets that she cannot respond personally to queries.