The Lending Score You’ve Never Heard Of

It takes more than a good credit score to get the best terms on a loan


If you thought a great credit score was all you needed to get the best terms on a loan, you’re wrong. Lenders use several measurements to gauge your creditworthiness. One of them is a little-known tool called the custom application score. “Custom application scores are common with auto lenders, credit card issuers, and mortgage lenders. Most of the major lenders are using some sort of application scoring system,” says John Ulzheimer, president of consumer education at

An application model is a scoring system that takes into account information you put on an application. All the information (salary, how long you’ve been with an employer, whether you rent or own, how long you’ve lived at the same address, etc.), in addition to your credit score, is scored. Based on your answers, you are then given a custom application score. Lenders also use application scores by themselves in order to make a loan decision. A good application score doesn’t mean a good credit score, and a bad credit score doesn’t mean a bad application score. In a case where one score is good and one score is bad, conservative lenders could make their decision on the lower score, especially in light of the current economic climate.

Custom scores are used because they’re more predictive than a credit bureau score. “Credit bureau scores are referred to as generic scoring systems. Any lender of any size can use them; they can all buy the same exact score from a credit bureau. But a custom application score is a score that only a specific lender has access to,” says Ulzheimer.

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