This is why credit scores are so confusing

Dear Liz: I am from Germany. I have had a bank account in America for over one year. Now I get my FICO score. After six months it was 738, half a year later, it was 771 and one month after that, 759. Why does it change in such a short time? Is it the real FICO score?

Answer: Welcome to the U.S. and its sometimes-baffling credit scoring systems. Even people who were born here often misunderstand how credit scores work.

You don’t have just one score; you have many, and they change all the time to reflect the changing information in your credit reports. Higher or lower balances on a credit card, a new credit application or the simple passage of time can make the numbers change.

The FICO scoring system is the most dominant, but lenders also use VantageScore, a FICO rival created by the three credit bureaus (Equifax, Experian and TransUnion), plus proprietary scores.

You also will see different numbers depending on which credit bureau report is used to create the score and which version of the score is used. Credit scoring formulas may be designed for certain industries and formulas are updated over time.

So your FICO Auto Score 6 from Experian likely won’t be the same as your FICO 4 from TransUnion, your FICO Bankcard Score 4 from Equifax or your VantageScore 3 from any of the bureaus, even if you get all the scores on the same day.

It can be hard to predict which score a lender will use, but the same behaviors tend to be rewarded by all of them. Those behaviors include paying bills on time, using only a small portion of your available credit, having different types of credit (installment loans and revolving accounts, such as credit cards) and applying for new credit sparingly.

If you’re using a score to monitor your credit, it’s important to use the same kind from the same bureau — otherwise you’re comparing apples and oranges, as we say in English.

Resetting the Social Security clock

Dear Liz: I read that you can pay Social Security back the payments you’ve received in order to “reset the clock” and get a larger benefit. Is that true or did I misunderstand the article? My husband started two years ago to claim Social Security benefits at age 67, but if he had waited until he was 70, of course the checks would have been higher for all future payments. Can he pay back to the Social Security administration the amounts already paid to him in order to now claim the higher rate as if he had delayed receiving monthly payments?

Answer: It’s not just his own checks that could have been higher. If he was the higher earner, then the survivor benefit that one of you will receive when the other dies would also have been higher.

Unfortunately, the “do over” option is now only available in the first twelve months after someone begins receiving benefits. People who change their minds during that period can withdraw their Social Security applications, pay back the money they received and then restart their benefits later, when the amounts they get would be larger.

For more information, check out Social Security’s page “If You Change Your Mind” (www.ssa.gov has all sorts of information). After the first year, people can’t withdraw their applications.

Your husband still has the option of suspending his benefit, however. He wouldn’t be able to completely reset the clock, but he also wouldn’t have to pay back all the benefits he received. Instead, every month he waited to restart his checks would increase his benefit by two-thirds of 1% each month (or a total of 8% a year) until he reached age 70, when the benefit would max out.

Social Security representatives have been known to falsely tell people that this option no longer exists, but it’s still available to anyone who has reached full retirement age, which is currently 66.