Save Time, Money, and Frustration: 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.
© 2005 Courtesy of The Found Here Network. Find Credit Reports
Online