Will the real FICO score please raise their hand!?
Every year you do your due diligence and order copies of your credit reports so you can ensure that everything is in order and you’ve not been a victim of identity theft. Just for the heck of it you order your scores too. So far, so good – scores in the 700’s. Now you’re going to apply for a mortgage and the loan officer pulls your credit and ….. scores in the 600’s?! What happened?
Possibly nothing. They are just looking at a different scoring model. When we pull our own credit reports and get scores what we are getting are "personal scores". Every industry has its own scoring models. If you apply for a car, a credit card, a mortgage, even insurance – all those are different scoring models and all will have different scores. They are all based on different parameters. Personal scores will almost always be the highest of all credit scores. But they are not used by any industry for any reason. They are there as a nice "warm and fuzzy" to make us feel good about ourselves.
There are some scores that people will get that are not even true FICO scores. One place you can get your FICO scores, short of a lender pulling your credit, is through www.myfico.com. But again, what you will get are personal FICO scores that are not industry driven.
What about annualcreditreport.com? That website takes you to each individual bureaus website to obtain your credit. Those are FICO scores – right? Not necessarily. When you pull your credit though Experian and order your scores what you are getting is a Plus Score which is a score based on an in house model developed by Experian not by Fair Isaac. The same is true of Trans Union – when you order your score though them what you are getting is a TransRisk score which is also an in house model. If you want a FICO score from Trans Union you have to order it through their sister sight which is http://www.transunioncs.com/. Through Equifax you can get your FICO score. They do not have an in house scoring model like the other two bureaus do. These scores, FICO or not, are still personal scores. The only way to obtain your mortgage scores is to go through a mortgage broker. They are set up with special codes that are used to pull your credit through the mortgage scoring models.
There are many websites out there that offer "credit scores". Beware, the majority of these are not true FICO scores but rather in house score models, otherwise known as FAKO scores.
We’ve all seen the rather annoying guitar playing, table waiting gentleman on television who’s been a victim of identity theft and is touting "freecreditreport.com". This is an Experian based website and what you will get here is the Experian Plus score not a FICO score. On top of that it’s really not free. To get your report you have to sign up for their credit monitoring service. Another one is "TrueCredit.com" which is a Trans Union website and it utilizes the TransRisk score. PrivacyMatters.com is another sight that uses the Trans Union TransRisk score. These companies may very well offer services that will be valuable to people, just be aware that the scores they provide may be way off from what your true FICO scores are.
Another catch to watch out for are "bankcard scores". Washington Mutual/Providian will send you your score on your monthly statement. This is a true FICO score however it is a revolving score which again will be different then a mortgage score of even a personal score. And these scores are about 30 days old by the time the cardholder actually receives the statement. Remember, scores can change daily so 30 day old scores are not usually very accurate.
Why all the differences and why even bother to look at your score if they’re all going to be so different? Each score model has factors that carry different weight depending on what they are for. For example when you apply for a credit card it will look more heavily at past credit card history and balances, whereas when your credit is pulled for a mortgage company this will lean more towards looking at any mortgage history you have had. Seeing your credit scores is not really a necessity but if you do go that route it is important to know what those scores may or may not mean which will depend on where you are getting the scores.
Just remember, the most important scores are your FICO scores. If you decide to order your credit scores from any entity, if it just says "credit scores" and doesn’t say FICO you’re not getting the real deal.
Happy Holidays to everyone!