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Don’t Buy Non-FICO Credit Scores

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credit scoreBy now, many people are well-aware that the credit score is an important factor in finances. Your credit score can have a bearing on the interest rate you receive (possibly saving or costing you hundreds of dollars). Additionally, your credit score can also influence the insurance premium you pay, and affect other decisions related to finances.

But the main reason people worry about their credit scores usually has to do with borrowing money. And, in many cases, the credit score used is the FICO score. When consumers think about the word “credit score,” the score they are considering is the FICO score.

How Many Credit Scores Do You Have, Anyway?

Many lenders use the FICO score to make decisions about whether or not you qualify for a loan, as well as the interest rate you receive. Before you apply for a loan, it can help to check your credit score. However, the score you’re checking might not be your FICO score.

You actually have several credit scores. Each of the three major credit bureaus has its own score, based on the information in your report. The algorithm for figuring out your credit score for each is slightly different. If you check a web site owned by Experian for your credit score, it will likely be different than your actual FICO score. The same is true of a free credit score site owned by TransUnion or Equifax.

On top of these different credit scores, some lenders also have their own versions of credit scoring. These credit scoring models might weight different factors, or concentrate on certain behaviors. The result is that you actually have several credit scores. Indeed, a check of my credit scores from each of the three major credit bureaus, and from FICO, shows a variance of 25 points between the lowest score and the highest score.

If you want to know what a mortgage lender is most likely to use to make decision, you need to check your FICO score because scores can vary from source to source, and that score is rarely free to view. Don’t be fooled; many of those paid credit score sites, and free credit score sites offer scores that are different from FICO. (In fact, Experian is being sued for fraud because some consumers think they will get their FICO score when they visit FreeCreditReport.com.)

Are Other Scores Useless?

Getting a free score from a site like CreditKarma, Credit Sesame, and Quizzle isn’t necessarily useless, even though it’s not your actual FICO score. You can get a general idea of the progress you are making with these free services so they do have value. You can see whether your credit situation has improved, or whether it has become worse. Even if you aren’t seeing your FICO score, you are still seeing information about your situation, and you can learn about what actions you can take to improve your credit score.

However, if you are using paid credit score services, other than FICO, to look at your score, it’s usually not going to be worth your money. Although you are getting a credit score, it isn’t your FICO score, and it may not provide you with an accurate picture of how lenders see you.

(Photo: me and the sysop)

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7 Responses to “Don’t Buy Non-FICO Credit Scores”

  1. Modest Money says:

    That’s good to know this about credit scores. I think many people would just assume that all credit scores are based on the exact same factors. While they may still be a good rough estimate, you don’t want to be relying on a different credit score than what lenders are looking at.

  2. If you use Annual Credit Report dot com, and get the Equifax credit score, that is your true FICO score. It costs $8-9 last time I used it.

  3. DachsieLady says:

    The following article was linked from Rense.com yesterday. Websites that offer consumers a chance to see their credit reports are being brazenly used by hackers to steal victims’ information.

    http://redtape.msnbc.msn.com/_news/2012/03/26/10875023-exclusive-hackers-turn-credit-report-websites-against-consumers

    EXCLUSIVE: Hackers turn credit report websites against consumers

    excerpt quote from article…

    “”We really have no idea how many reports have been used or put up for sale in the ‘libraries,’” said Clements, who also operates a consulting firm.

    The credit report trade shows why even simple credit card fraud – long considered a relatively benign form of ID theft – can escalate quickly into a full-blown identity nightmare. Criminals with stolen cards can obtain background reports, credit reports and ultimately open new accounts using the information gleaned about the victim, Clements said.”

    ________

    I think the entire banking and credit industry, including credit reporting agencies are now to be regarded as big crooks.

    Many of the people who bought homes (remember the “sub prime mortage crisis” that is heading the USA into a total economic collapse) had excellent credit ratings. They were sold overpriced homes with usurious interest rates and then their employers were encouraged by the banksters and their “elected represenatives” to move the companies overseas thereby putting the mortgagee out of work and in to default on their crooked mortgage loan that was sold and resold and into numerous derivative type fraudulent financial instruments.

    I really think it is time for all good Americans to drop out of the entire credit and credit card system. Banks are not really interested anymore in serving the credit needs of their customers. Banks are only interested in getting the most return on their money in the quickest amount of time, regardless of how they ruin the lives of the people with originally good credit ratings who tried to play the game by the rules.

  4. DachsieLady says:

    The entire credit industry is a giant rip-off. The lenders are no longer in the business of helping people who have played the game by the rules and who have maintained a good credit rating. The Banksters want the most bucks in return on their money in the shortest amount of time, and feel just fine about closing USA companies that employ their credit applicants!

    I just posted another posting but if it does not show as posted I will unsubscribe.

  5. Brad K says:

    I’m in the credit business serving mortgage originators primarily. The consumers scores available – primarily “Vantage” and “MyFico” are expressly for consumers and tend to be slightly higher (broadly) than the actual B2B FICO’s used commercially. the bureaus may NOT give you the commercial score – they have to to give you the consumer model. FICO has MANY versions. That said, they are STILL highly correlated and useful for managing your credit but absolutely will NOT match what a lender will receive.

  6. JoeTaxpayer says:

    Good warning, although I found that CreditKarma was right in the range of the three. I recently refinanced the home mortgage, one last time I hope, and saw my three scores. The three were varied by over 20 points low to high, and Karma was in the range, just over the average of the three.

  7. I personally only use FICO scores since that’s what most of the big lenders use to analyze people’s credit.


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