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FICO Scores vs. Non-FICO Scores
Every time you apply for a loan or credit card, the lender uses a credit score to determine if you qualify. What you must understand is that there are a number of different credit scores advertised to consumers—but these scores are not the same scores used by lenders. FICO (formerly Fair Isaac Corporation) is the developer of the most popular and widely used “risk score”. Banks, lenders, and credit card issuers will use this score to determine your creditworthiness—the higher the score, the better. Scores range from 300 to 850. Each of the three major credit reporting agencies (TransUnion, Experian, & Equifax) have a FICO score and they determine the statistical chance that a consumer will go 90 or more days delinquent on a loan obligation within a 24 month period.
Do not confuse other credit “risk” scores with your FICO scores. There are a number of companies that advertise and offer credit scores—usually for a fee. Many of these scores are available to consumers on websites that offer credit reports or credit monitoring services. Again, these scores are not FICO scores, and are not used by lenders to determine whether or not to approve you for a loan or credit card.
Other than applying for a loan through a lender, there are very few places for a consumer to get a true FICO score. One such website is www.myfico.com. In today’s market, consumers must make sure we are comparing apples to apples and understand what scores are used by lenders. If it’s not a FICO score, it does nothing more than give you a general idea of what your FICO score is. And that’s not saying much…I’ve seen non-FICO scores be as much as 60 points different from a true consumer “risk” FICO score.
I have been providing credit education for years and have helped thousands of people improve their credit scores. If you, or someone you know, is having issues with credit, contact me to find out how I can help.
Kevin D. Weier
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