By EILEEN AJ CONNELLY — AP Personal Finance Writer

NEW YORK (AP) — Beverly and Richard Palmer want to buy a house this year.

Knowing how important credit history is when applying for a mortgage, Beverly went online to check their credit reports and credit scores to see where they stood. They knew there would be some blemishes, she said. "But it wasn't new stuff. We thought we could be in pretty good shape."

Believing they were ready to get the homebuying process started, they called Pat Schilling, the vice president for mortgage lending at Busey Bank in her home town of Champaign, Ill.

The first thing Schilling did was pull the Palmers' credit scores. But the results were about 50 points below what the couple found, and he advised they hold off applying for a mortgage until they boost their scores.

It happens all the time, Schilling said. Customers come in having checked their scores online, only to find out the scores available to consumers on Web sites are far different from the ones the bank uses. A 50- to 60-point difference is not uncommon, he said, and almost every time, the score he gets is the lower one.

"I'm the one that has to break it to them across the table," he added.

It's not uncommon. Michael Dutra has had similar experiences at his office in Providence, R.I. The mortgage adviser with Province Mortgage Associates said it happens so often, his office held an employee seminar explaining the differences between the scores potential borrowers can get and the ones lenders get. "Those scores are more informational scores," he said of the ones available to consumers. "The ones that we get are used to determine likelihood of repayment."

The recession has increased awareness about credit scores as people try to keep a closer watch on their finances. But while many are learning the importance of the various factors that go into determining a credit score — on-time payments, the ratio of debt to available credit, the length of credit history and so forth — there's still a good deal of mystery surrounding the numbers.

For instance, Web sites that sell credit scores don't explain clearly that there are literally hundreds of ways for a score to be computed, and different lenders use different formulas. "It's a little disheartening to find out you just spent X number of dollars for something that isn't useful," said John Ulzheimer, president of educational services for

By far the most popular Web site for consumers is the heavily advertised, operated by Experian, one of the three main credit reporting agencies. In April, more than 6.6 million people visited the site promoted by the cute boy band, compared with 2.4 million for closest rival, according to comScore, which tracks Internet usage.

One of the recent visitors to was Beverly Palmer. Schilling said most of his customers who expect far higher scores than he gets use that site, although he has seen discrepancies from other providers.

The site operator maintains its scores are meant to be educational. "It's not represented to consumers as 'This is the exact score that lenders will see,'" said Susan Henson, director of public relations for Experian. "The intent is to give the consumers the range of risk approximately that a lender would view them. If consumers want to know exactly what that lender is going to be looking at, then they need to consult with a mortgage broker."

The explanation on can't be seen until consumers submit personal information and a credit card number, and then click on a link providing a definition of their score, called a PLUS score. (The credit card will be charged $14.95 per month for a credit monitoring service, unless the customer cancels that service within nine days.)

The small print identifies the PLUS score as "educational," and says the score "is derived from information based on a consumer's credit report, using a formula similar to those used by lenders." Elsewhere, the site says, "The Experian-developed PLUS Score is easier to use and understand than most credit scores on the market."

What the site does not say is the PLUS score won't match scores used to actually decide if you'll get a loan.

The vast majority of lenders — about 90 percent — use scores calculated using software from FICO, formerly called Fair Isaac. A FICO score ranges between 350 and 850, with scores above 750 considered excellent.

FICO operates a Web site for consumers,, which sells credit report and score monitoring services, but even the number from that site may not be the score a lender will see.

Each agency has its own version of the FICO score, explained Barry Paperno, consumer operations manager with The differences sometimes stem from when the software they're using was developed. FICO regularly updates its software, he said, but changes are adopted slowly. "It can take years, easily, before a score becomes the score that most lenders use."

What's more, there are different scores for different purposes, based on the type of loan a consumer seeks. That means if the same person applied for a mortgage, a car loan and a credit card, the three agencies could generate nine different scores. When an individual applies for a mortgage backed by the government-sponsored Fannie Mae or Freddie Mac, banks pull mortgage scores from all three agencies and use the middle one.

"I think the thing that's confusing for people is that there's a perception that there's one score out there that's 'the' score," said Steve Katz, a spokesman for TransUnion.

Yet even though the scores consumers can get online may be different from the ones the banks use, some say they are still useful.

Ken Lin, chief executive of, a free site that offers scores from TransUnion, said he thinks the important thing is to monitor changes in the score they see over time. "There's really no way for you to actually get your score," he said. What the Web sites can tell you if your score is generally poor, fair or excellent.

Beverly Palmer said she found it very strange her credit score wasn't as good as she expected. "We were just misled, I guess," she said. But she is still determined to improve her score and buy her first house.

"We still believe God is going to bless us with one before this year is out," she said. "We would like to get in on that $8,000 tax credit for first-time homebuyers."

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