By 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 )