Borrower Beware - All Credit Scores Are Not Alike

Your credit score is a numerical gauge of your ability to payback loans. Anytime you desire to borrow money or get credit, the lender will look up this score to determine the hazard involved in lending to you. The higher the score the better, so if you get a credit report and see a high score that agency your credit is good, right?

Not necessarily so. The fact is there are respective 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 cognize what your credit score really is? Well, luckily, 75% percent of lenders utilize FICO scores exclusively and you can purchase FICO scores yourself--you just have got to cognize where to go.

FICO credit scoring was developed by Carnival Isaac and Company as a numerical method of determining your credit worthiness. The scores range between 300 and 850 and are basically based on your past measure paying performance.

It would be easy if everyone used this scoring system, but the three major credit bureaus each have got their ain version of the FICO score: Equifax utilizes the Beacon system, TransUnion utilizes the Empirica system, and Experian utilizes the Experian/Fair Isaac system.

Althought they all usage slightly different systems, all systems are based on the original FICO scoring method so generally your score should be like from each. Of course, some lenders may also utilize their ain scoring methods as well.

There is only one topographic point 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 purchase your credit report and score directly from Experians website, you are getting what they name the "PLUS Score," which is NOT a FICO score, and is NOT used by lenders anywhere. (Equifax is the exception--you can purchase your FICO score directly from them at their website; however, the lone topographic point 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 as ballyhoo misleads consumers into buying their PLUS Score thought 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 merchandising non-FICO scores claim. Even a few points difference in your credit score can intend confronting the world of the loss of thousands of dollars out of your pocket--a loss that you probably didn't program for. The adjacent clip you desire the most accurate credit score available, make yourself a favour and get the industry standard: the FICO credit score.