FICO scores, based on the formula developed by the Fair Isaacs Corporation, are the industry standard.  All the other scores are ‘consumer scores’, most of them developed and marketed by the credit bureaus to compete with FICO scores and get a piece of the revenue generated by consumers’ growing awareness of the importance of credit scores.  These consumer scores are generally not an apples-to-apples comparison of scores so when someone takes their ‘credit’ score to their lender, they are often disappointed to find out their actual FICO score is much different than what they purchased.

I just read an article in Stephen Snyder’s newsletter detailing an account from a reader who was told by an Experian representative that none of the three credit bureaus used the FICO score formula any more.  This is completely inaccurate.   As the industry standard, FICO scores are used by:

* Over 4,000 financial services providers

* The two largest mortgage securitization companies

* Nearly 75% of the top global banks

* The top 10 U.S. property and casualty insurers

* More than 100 retailers, including half of the top 50 retailers in the US

* 8 of the top 10 pharmaceuticals companies

So, again, we say, DO NOT SPEND YOUR MONEY ON ANY SCORES OTHER THAN FICO SCORES.  All of the others are just informational, they do not give you an accurate picture of how your lender will see you.  Keep in mind, there is a reason the ‘consumer scores’ are being heavily advertised on pricey television commercials – they expect to make lots of money.  Make sure you’re getting something that is beneficial to you, not just some three digit number. 

NOTE: “FREE” credit scores that require you to give your credit card number and sign up for something are not FREE!  More info here.

You can get two of your FICO scores, with complete credit reports, for $16 each.  Contact us for current discount codes that can save 15 – 20%, making them about $13 each.

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Remember, your truly FREE reports are at annualcreditreport.com.  You are entitled to three per year at no cost; that is one from each of the three credit bureaus.  They’ll all try to sell you something on the way to getting your free report, even through the official government mandated website.  Just click on the NO or NO THANKS button and continue on your way.

If you do decide to sign up for anything when you’re online, read the fine print.  If you have questions, email or call the company for clarification and ask where on their site that information is so you have a copy in writing. 

When you give a credit card number for any automatic billing, ask about the cancellation procedure.  We have had many clients with recurring automatic billing that they have attempted to cancel and are still being charged for. 

When you do contact the company to cancel a recurring charge, get written confirmation that the automatic billing will be stopped and be sure the date of the cancellation is clearly stated.  And then keep the paper!  

Read your account statements and monitor your credit report regularly to be sure that you are not losing money or paying extra for something you really don’t want, need or have previously cancelled.

Contact us for information on getting your Credit Check Up to learn how to build better credit scores.

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The two sites being advertised the heaviest right now are the freescore and freecreditreport websites.   Experian, one of the three major credit bureaus, owns the company advertising the free credit reports.  The free score site is a subsidiary of Vertrue Inc., which this Wall Street Journal article states has had numerous consumer complaints with the Better Business Bureau.

Neither of them offer FICO scores, which is the scoring formula that the majority of lenders use.

And neither of them are FREE!  You get the ‘free score’ or ‘free reports’ after enrolling with… or signing up for….. 

Remember, if you have to give credit card information to get something, IT ISN’T FREE.

WHAT TO DO

For much less than the several hundred dollars per year they charge, you can check your own reports.   Go to www.annualcreditreport.com to get the no-cost reports you’re entitled to each year.  Because we all get three of them, one from each bureau, you can monitor them throughout the year by checking a different one every four months.  Couples with shared accounts can utilize their combined 6 reports each year to check a different one every two months for year-round, effective monitoring. 

Look for accounts you don’t recognize, balances on closed accounts, late payments on accounts that were never late, unknown addresses, incorrect birthdays and social security numbers, and misspelled names.  This article has information on how to request correction of the errors you find.

To get your scores, we strongly recommend that you only pay for FICO scores.  Any other scores are not an apples-to-apples comparison close to the scores that lenders use.  You can go right to the FICO source to get your TransUnion and Equifax FICO scores, with the credit reports, by clicking here.  They are $16 each and you can contact us for current discounts.

NOTE: In February 2009, Experian took away the consumers’ right to get their own Experian FICO score.

Some people have their friend or relative in the banking or mortgage industry get their credit report with scores for them.  This does show actual FICO scores, and they are the exact ones that lender uses.  However, having a company obtain your credit report will result in a Hard Inquiry that counts against your scores.  Checking your own reports and scores is a Soft Inquiry and does not count against you.

SUMMARY
The companies that advertise “free” scores and/or reports, are counting on most people signing up and then NOT canceling their subscription before the trial period ends.  It may be 3, 4, or even 6 months before someone decides they are not using the service and want out.  By then, the company made some money and the consumer spent some on a product they may not have used or even understood.

Be very careful when enrolling in any of these “free” services.  Be sure you read all of the fine print, be sure you have an exit strategy in mind going into it, and mark your calendar or planner with the date you intend to cancel.

It DOES pay to learn about your credit and your scores.  However, you don’t have to pay to just to see your credit report.  And you can pay a lot less than $30 a month to get your true FICO scores.

Thanks, David, for a great question.

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   According to Fair Isaac Corporation, creator of the FICO score, one of the three credit bureaus, Experian, will no longer allow consumers to view their FICO scores based on Experian data.  This becomes effective February 14, 2009.  

After that time, consumers will only be able to obtain two of their own FICO scores, but not all three.

WHY IT MATTERS

Since the FACT Act of 2003, we consumers have had the ability to view our credit reports and purchase our credit scores.  This allows us to be prepared before going to a lender by checking our reports for accuracy and knowing what our scores are ahead of time. 

The majority of lenders in the U.S. use the FICO scoring formula, even though the credit bureaus have their own scoring formula, designed to compete with FICO.  For mortgage applications, the lender typically uses the middle or “mid” score.  Thus knowing all three FICO scores is imperative to the proactive consumer.  Especially if your mid score is only a few points from the lender’s minimum, you can take steps to optimize and build your credit to be able to qualify.

WHAT IT MEANS

Consumers will be unable to accurately compare their own credit information on an equal basis with what their lender will see.  Experian will still make a credit score available, but it will not likely be an apples-to-apples comparison with the lender’s scores.  This is a disadvantage to consumers who may have time constraints for loan approval, perhaps due to the need to refinance their mortgage to avoid foreclosure.

Additionally, consumers will not know their Experian FICO score until a lender pulls their credit.  At that point, the consumer gets a Hard Inquiry against their credit score because of the authorized credit application.  When we consumers check our own credit scores and reports, it is a Soft Inquiry and has no negative impact on credit scores.

WHAT TO DO

You can issue a formal complaint to your Congressional representatives and to the Federal Trade Commission, the regulatory agency that oversees the credit bureaus.  Please see the end of this article for the email I sent to seven Congressional Reps.  You can also complain to Experian directly at 714.830.5300 to voice your opinion.

If you didn’t get them in January, you may want to get all three of your FICO scores before the 14^th.  This will provide a good picture of where your credit rating is right now, and give you the opportunity to check with your lender to determine how close you are to the current qualifications.  Use the third link in the Links box, upper right on this page.  Contact us for discount codes.

Spread the word.  Forward this information to your friends and relatives now.

It is extremely important, especially during these challenging economic times, for consumers to take charge of their Personal Financial Fitness.   Becoming informed, correcting your credit reports and knowing your FICO scores puts you that much closer to reaching your goals.

EMAIL SENT TO CONGRESS

Beginning February 14th, one of the three major credit reporting agencies, Experian, will stop the availability of the consumer FICO score.  This is an affront to all consumers who are trying to maintain their financial futures in the midst of an ongoing national economic crisis and who are attempting to protect their pocketbook and credit rating. 

In 2003, FACTA finally gave consumers the right to see their credit reports and have the opportunity to purchase their credit score.  Having this information and being prepared before applying for a loan gives consumers an advantage and increases their financial options.

The majority of lenders in the U.S. use the FICO scoring model for their lending decisions.  The other scores, including Vantage, that the three credit reporting agencies developed to compete with FICO and which they heavily advertise to consumers are NOT the same.  In fact, they are usually much higher than a true FICO score, often giving consumers a false sense of optimism and even credit complacency.

As a consumer, I am appalled that a company whose website claims they are “…dedicated to helping organisations and consumers make commercial and financial decisions with greater confidence and control” would deny   American consumers this important and financially vital information.

As a credit consultant, I know that consumers will have additional struggles and hurdles when trying to refinance their homes, or purchase a vehicle, or get a personal loan or credit card due to lack of accurate, effective information. 

They will lose the ability to check their own FICO scores, which does NOT count against their scores.  They will have to wait until a lender pulls a tri-merge report to know their actual, third FICO score, resulting in a Hard Inquiry and counting against their score.

I truly hope that Congress will consider the ramifications of this development as they review all options in helping consumers, and the nation, get through this challenging time.

Sincerely,

Dana Coyle

In the U.S. the FICO score is used by the majority of financial institutions.  It was created in the 1950s by the Fair Isaacs Corporation and ranges from 300 to 850.  Generally, the higher the score, the more financial options a consumer has.

FICO has specific formulas for different industries: mortgage, auto and consumer credit.  They have slight variations in the calculations but are all FICO scores. 

Additionally, each of the three credit bureaus has its own FICO version.

Equifax: Beacon, Beacon 5.0, Beacon 96, and Pinnacle

TransUnion: Empirica, Empirica Auto 95, Precision Score, and Precision 03

Experian: Fair Isaac Risk Score, FICO and FICO II

There are many other scoring formulas available, including the ones created by the three major credit bureaus to compete with the FICO formula.  However, they are NOT exactly the same.

NON FICO CREDIT SCORES

These consumer credit scores are not actual FICO scores:

CE – Community Empower

Credit Expert

Credit Secure from American Express 

National Risk Score

NextGen

Plus Score

Vantage Score

When you monitor your credit with your free credit reports from that you are entitled to under FACTA, the amendment to the Fair Credit Reporting Act (FCRA), you will be given the opportunity to purchase a credit score at that time. The FCRA allows the credit bureaus to charge for a credit score and they certainly want to sell you one while you are getting your free report.  These are usually NOT a true FICO score.

HOW TO GET YOUR REAL FICO SCORES

The third link at top right side of this page takes you to the Fair Isaacs website, which offers all three FICO scores with the three credit reports for under $50 in the “Credit Complete Package”.  You can save 20% until January 31, 2009 by using the discount code “FICO 2009”.

Some credit card companies and banks offer their customers access to their own FICO scores.  Check with your financial institutions to see if they offer this free service and if so, use it.  

Finally, remember that checking your own scores does NOT count against your credit rating.  It makes sense to know your scores and grow them as much as possible before you need them.  Become credit-wise to help get better credit scores and give yourself as many financial advantages as possible.

Your credit file is created when companies that you do business with report their customers’ account information to the credit bureaus.  They are “subscribers” and pay the bureaus to report each month.  Most major national companies report to all three; however, smaller companies such as collection agencies may not want to pay all three credit bureaus so they only report to one or two.  This is one reason for the differences in your credit files between the three bureaus.

There is no federal law stating that companies must report to the credit bureaus.  Because so many companies DO report, the Fair Credit Reporting Act (FCRA) spells out the length of time different types of information can stay on your report.

1) ACCOUNTS IN GOOD STANDING – 10 Years

Closed accounts that were never late or had any other derogatory information reported can stay on your credit report for up to ten years.  They help your score.

2) LATE PAYMENTS – 7 years

When a monthly payment is overdue by more than 30 days, it will usually shows up on the credit report.  These late payments of 30, 60, and 90+ days can stay on the credit file for seven years from the time they happened.

3) CHARGE OFFS – 7.5 years

When a company lists an account as a “charge off” or “loss to profit and loss” it can stay on your credit for seven years plus six months from the date of the first delinquency that led to the charge off.

4) COLLECTIONS – 7 years

The seven year reporting period starts with the original delinquency with the original creditor, NOT the “date opened” listed by the collection agency on the credit report.  The collection accounts often look newer with more recent dates; therefore it is important to know exactly what the collection item is for and when the original charge occurred.

5) JUDGMENTS – 7 years

The FCRA states that civil judgments can stay on for seven years from the filing date or until the governing statute of limitations has expired, whichever is longer.  Check information for your state here.

6) TAX LIENS – 7 years if paid

Unpaid tax liens can stay on the credit reports indefinitely.  Paid tax liens stay on for seven years from the date of payment.

7) BANKRUPTCY – 10 years

Chapter 7 and 11 bankruptcies can stay on for ten years from the date filed.

NOTE: Accounts included in the bankruptcy stay on for seven years from the date filed.  Late payments listed for those accounts will still come off at their own seven-year mark, even if the account was included in bankruptcy.

Chapter 12 and 13 bankruptcies that are completed and discharged can stay on for seven years from the date filed.   Dismissed, or unfinished, Chapter 12 or 13 cases can stay on the credit file for ten years from the date filed.

WHAT TO DO

If your credit report contains information that is past the reporting period, contact all three of the credit bureaus to get it removed and corrected.  You are well within your consumer rights to do so.  Be sure to follow up, making certain that your report is accurate and that no expired items remain.

Learning about your credit and being proactive in building a positive credit rating is an important step to healthy Financial Fitness for your future.   Contact us today for your in-depth Credit Analysis to be sure your credit report is as accurate as possible.

The Arizona Daily Star is reporting that an Arizona Department of Economic Security hard-drive containing personal and sensitive information for a number of Arizona children was stolen from a storage unit in Phoenix.  Several other storage units, not belonging to DES, were also broken into, so it does not appear that the DES unit was specifically targeted.

The back-up hard drive contained names, addresses, phone numbers and social security numbers for families referred to the Arizona Early Intervention Program over the past several years, according to DES spokeswoman, Vicki Gaubeca.  It also included insurance information and info about the children’s disability.   The Arizona Early Intervention Program is a statewide system of supports and services for families of children — ages 0 to 3 — with disabilities or developmental delays.

Letters were sent on October 24th to the families of 40,000 children across the state as a precaution even though DES officials say there is no reason to believe that any of the data has been compromised as the hard drive is password protected.

If you believe your information may be compromised, contact all three of the credit bureaus to request a fraud alert be placed on your credit file. 

Equifax: 1-800-525-6285; P.O. Box 740241, Atlanta, GA 30374-0241
Experian: 1-888-EXPERIAN (397-3742); P.O. Box 9532, Allen, TX 75013
TransUnion: 1-800-680-7289; Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790

When you receive the letter from DES, follow the credit monitoring instructions provided in it.  Take advantage of all the resources that are made available to you.   Get the free credit reports as often as you can to check for signs of identity theft.  These signs could include unknown accounts that are recently opened, balances on your existing accounts that you didn’t charge, collection accounts for things you never had and addresses for places you have never lived in. 

Be sure to keep copies of all correspondence that you send and receive regarding this matter, including credit reports that are accurate.  The information you save now can be helpful in the future in the event you need to deal with erroneous credit reporting due to identity theft issues.

For more information on Identity Theft prevention, click here.

Go to www.myfico.com, click on the Products tab, and look for the FICO Credit Complete.  The discount code to use at checkout is “Summer20″.  You will be able to log in and view your reports for the thirty days after you purchase them. 

FICO scores are the scores actually used by most lenders in the U.S.  Most of the scores advertised on television and the radio are “consumer credit scores”, developed by the credit bureaus to compete with the FICO score.  They rarely are the same as your FICO score so if you want to see what your lender is going to see when they check your credit, these FICO scores are the closest you can get.

NOTE: Checking your own credit report and purchasing your own scores does NOT count against your score.  It will show up on your report as an Inquiry, but is not included in the scoring formula. 

Our in-depth credit analysis provides you with the information you need to optimize your credit scores, continue to grow your good credit and protect yourself against identity theft.  And you can get it right now for only $100.   Just fax or email a copy to us today.