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Save Time, Money, and Frustration and Get the Right
Credit Score
You go into a lender's office prepared
to apply for and receive a loan. After all, you've done
your homework, you've pulled your credit reports and
you know what your credit scores are--you even got one
score from each of the three major credit bureaus: Equifax.
Experian, and TransUnion. You are shocked when your
loan is denied, or maybe you were approved, but the
interest rate is much higher than you anticipated. How
can that be you say? My credit score is good, I know
I checked. Maybe it's not as good as you think. It all
depends on there you got it and what kind of credit
score it is.
The fact is there are several different
credit scoring methods. Credit scores calculated from
the same credit reports can differ substantially from
credit scoring method to credit scoring method. So how
can you ever know what your credit score really is?
Well, luckily, 75% percent of lenders use FICO scores
exclusively and you can purchase FICO scores yourself--you
just have to know where to go. (www.myfico.com)
FICO credit scoring is a numeric method
of scoring your credit worthiness developed by Fair
Isaac and Company. Your credit score is a number between
300 and 850 that tells creditors how likely you are
to pay your bills. The higher the number, the better
it looks to potential lenders and creditors.
The three major credit bureaus each
have their own version of the FICO score: Equifax uses
the Beacon system, TransUnion uses the Empirica system,
and Experian uses the Experian/Fair Isaac system. Despite
each credit bureaus' use of their own versions, all
systems are based the original Fair Isaac FICO scoring
method, so each credit score calculated with these systems
are generally called FICO scores. However, although
most lenders do use FICO scoring, some lenders may have
their own scoring methods.
There is only one place where you can
get your FICO score from all three bureaus and that
is at www.myfico.com. If you order your credit score
from anywhere else, again be aware that these scores
are "FAKOs" (or "fake") and can
differ considerably from your FICO credit scores.
Adding to the confusion is the credit
bureaus themselves. Recently, Experian revealed that
the national average credit score of its consumers is
678. This is very misleading to the average consumer.
When you buy your credit report and score directly from
Experians website, you are getting what they call the
"PLUS Score," which is NOT a FICO score, and
is NOT used by lenders anywhere. (Equifax is the exception--you
can buy your FICO score directly from them at their
website; however, the only place to get all three scores
together is at www.myfico.com.) The 678 PLUS Score reported
by Experian is actually the average of consumers' PLUS
Scores, not their FICO Scores.
Clearly, the PLUS Score (and all Non-FICO
scores) are useless. Not only that, but such hype misleads
consumers into purchasing their PLUS Score thinking
that they are getting the same credit score that their
lender will use. Non-FICO scores are worthless not matter
what the credit bureaus or any website selling non-FICO
scores claim. Even a few points difference in your credit
score can mean confronting the reality of the loss of
thousands of dollars out of your pocket--a loss that
you probably didn't plan for. The next time you want
the most accurate credit score available, do yourself
a favor and get the industry standard: the FICO credit
score.
1howto.com
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