When you want to check your own credit scores, we recommend getting FICO scores.  The Fair Isaacs Corporation owns the FICO scoring formulas and the majority of lenders in the United States use some version of the FICO score. 

The consumer credit scores that are heavily advertised, particularly by the credit bureaus, are not necessarily FICO scores.  This means that someone who does their homework, checks their credit before going to apply for a loan and thinks they have a 700 score, may be surprised to find that their lender has a much lower score to evaluate the loan with.

The reason: the consumer went in with something other than a FICO score so the comparison is not fair; it is not apples to apples, so to speak.  When the Fair and Accurate Credit Transactions Act (FACTA) was passed in 2003 as an amendment to the Fair Credit Reporting Act (FCRA), it gave consumers the right to see their credit reports at no cost. 

However, the credit bureaus maintained the right to charge for credit scores when a consumer got their credit report.  And, most likely, there were some fees for them to pay when they used the FICO formula to give the credit score to the consumers.   In 2005, the three major credit bureaus, Experian, Equifax and TransUnion, developed the Vantage Score, which was launched in March, 2006.  It was promoted as a consistent model to be used across the three credit bureaus making it easier for consumers to understand.

It also did not require the credit bureaus to pay a fee to Fair Isaacs when they generated a score for someone; perhaps a new revenue stream for these major corporations.  Which may explain why there are now so many television advertisements for credit reports and scores.  Well, it turns out that the majority of companies still use the FICO scores.  So even though many people are checking their credit and getting their scores, it doesn’t mean they are seeing the same numbers their lender is looking at.

Everyone can get their FICO scores at http://www.myfico.com/Products/Products.aspx.  The “FICO Credit Complete” is all three credit reports and scores.  And for the month of April, they are offering 25% off all products.  The discount code is   7yrsale.  This brings the price to under $36 for all three actual FICO scores.  This is recommended for anyone who is considering a major purchase in the next year such as a home or auto loan; or a mortgage refinance, so that you can check with lenders ahead of time for the current score requirements.

NOTE: Checking your own credit does NOT count against your scores.  It will show up on your credit report as a Soft Inquiry, but is not figured in the scoring formula. 

Contact us with any questions about credit scores and credit reports.