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Member
orenharel
Posts: 17
Registered: ‎02-13-2013
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Still Confused Regarding the Different Credit Scores

Hi there,

 

You would think that the concept of credit scoring would be simple and universal, but it is hard to believe how confusing it is (at least to the consumer).

 

I still don't understand the difference between the scoring methods. This is what I understand so far (please correct me if I am wrong):

1) MyFico calculates its own FICO score (indepenent of the scores calculated by the 3 bureaus) using general credit information that it collected from the 3 bureaus. (Is this correct or does it use the FICO score from one of the 3 bureaus?)

2) Each of the 3 bureaus calculate their own FICO score independently (and the FICO score will therefore vary between them), but they each have a different scoring method as well that they later created together (in addition to FICO), although this score is used by less that 10% of lenders.

3) If I wanted an accurate FICO score from each of the 3 bureaus, I would need to check the FICO score from each bureau independently.

 

Is this correct?

 

Thanks,

Oren

Moderator Emeritus
llecs
Posts: 32,869
Registered: ‎08-04-2007
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Re: Still Confused Regarding the Different Credit Scores


orenharel wrote:

Hi there,

 

You would think that the concept of credit scoring would be simple and universal, but it is hard to believe how confusing it is (at least to the consumer).

 

I still don't understand the difference between the scoring methods. This is what I understand so far (please correct me if I am wrong):

1) MyFico calculates its own FICO score (indepenent of the scores calculated by the 3 bureaus) using general credit information that it collected from the 3 bureaus. (Is this correct or does it use the FICO score from one of the 3 bureaus?)

2) Each of the 3 bureaus calculate their own FICO score independently (and the FICO score will therefore vary between them), but they each have a different scoring method as well that they later created together (in addition to FICO), although this score is used by less that 10% of lenders.

3) If I wanted an accurate FICO score from each of the 3 bureaus, I would need to check the FICO score from each bureau independently.

 

Is this correct?

 

Thanks,

Oren


Welcome!

 

1) FICO created a consumer-based site by which to access FICO scores and that's myFICO.com. MyFICO pays a fee to the CRAs to access their data by which to create a score.

 

2) Each of the 3 CRAs have an agreement with FICO by which to allow their data to be used when generating a FICO. It's lenders who request this information. I'd imagine that if the CRAs wanted to provide a FICO on their site (as EQ does) they'd have to pay a fee back to FICO for access to a FICO. The CRAs know that the term of "credit score" is ubiquitous and that they can capitalize by providing a credit score. That's why each of the 3 sell their own non-FICO (we call them FAKOs) score. They don't have to pay any money back to FICO and consumers come along and make the assumption that it is a FICO or at least a score used by lenders (it's not).

 

3) You're limited on the places to get your FICO score.

You can only buy your EQ FICO from myFICO, your lender, or from Equifax.com (buyer beware: the scores they push are a FAKO, but your EQ FICO can be purchased through EQ).

You can only buy your TU FICO from myFICO or your lender.

Finally, you can only buy your EX FICO from your lender. As of a few years ago, Experian blocked consumer access to your own EX FICO.

Aside from the above, you can also get your FICO scores for free or at a reduced price. Banks and CUs will offer it as a benefit. M&T Bank, Unitus Community Credit Union, and Digital Credit Union each offer an EQ FICO. You can get your TU FICO from Wal-Mart or Merrick Bank if you have CCs with them. And you can get your EX FICO from PA State Employees Credit Union (PSECU) if you have a checking account with them. There are other CUs out there that will offer a FICO if you ask them as part of a benefit for being a member.

Member
orenharel
Posts: 17
Registered: ‎02-13-2013
0

Re: Still Confused Regarding the Different Credit Scores

Thanks for your very elaborate explanation.

 

To ensure that I understand correctly:

- The job of the 3 CRAs in not to provide FICO scores but rather to track historical and current credit information for individuals, the FICO score is simply a by-product of this information.

- FICO invented the scoring methodology using the CRA's data and has proprietary ownership of the FICO credit score methodology.

- The 3 CRAs at some point decided to group together and create their own scoring methodology to gain business, but this is used by less than 10% of lenders and credit card providers in the market.

- The FICO score calculated through MyFico, Experian, Equifax and TransUnion will all vary due to the fact that each of the CRA's credit history for the same individual could vary, but since the credit history the CRAs have for the same individual typically doesn't vary much, the FICO score calculated through each CRA shouldn't vary much either since they use the same FICO calculation methodology. Although MyFICO calculates the FICO score using historical credit information from ALL 3 CRAs.

 

Therefore, there are essentially 4 different FICO scores that someone can get if they are quite keen on checking all their FICO scores:

1) MyFico - this FICO score comes directly from the MyFICO website, and although lenders don't use FICO scores coming directly from MyFICO, it is an accurate calculation that should be very close to the FICO calculation made using each of the CRAs data separately. You can get this score during the free trial.

2) Exquifax - you can get their FICO score through MyFico (for a cost) or directly through the Equifax website, but Equifax makes it difficult to find on their website because they try to promote their own credit scoring methodology.

3) TransUnion - you can get their FICO score only through MyFico (for a cost), TransUnion provides only their own credit scoring methodology through their website.

4) Experian - you can only get their FICO score through lenders - you can't get it through MyFICO or through Experian's website, they only provide their own credit scoring methodology through their website.

 

One more option for getting credit scores from all 3 CRAs are through lenders, credit unions or other organizations (depending on the credit agency).

 

Checking all the FICO scores and comparing them once in a while is not necessarily a bad thing as there is a possibility that one of the CRAs have incorrect credit history information, and if there is a larger variance than you expect in the credit scores this could indicate incorrect credit history data.

Member
orenharel
Posts: 17
Registered: ‎02-13-2013
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Re: Still Confused Regarding the Different Credit Scores

I would like to make a correction to my post above - it looks like the MyFICO credit score is actually based on Equifax data, so essentially it is the Equifax credit score calculation - is that correct?

Moderator Emeritus
llecs
Posts: 32,869
Registered: ‎08-04-2007
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Re: Still Confused Regarding the Different Credit Scores

Equifax.com does sell a FICO and their own FAKO. The score pushed through annualcreditreport is their own FAKO. If it doesn't say "FICO" next to the score then it isn't. Their FAKO will say "Equifax Credit Score".

 

Clarifications on your prev. post...

 

The FICO formula was created on contract with each individual CRA. As a result the FICO formula varies slightly across all 3. For example, EQ FICO tends to weigh utilization more than the other 2. Baddies tend to be weighed more with EX than the other two. And yes, not all 3 reports will exactly match. Small variations can throw the score off too.

 

Lenders use the FICOs from here. Each FICO score has a specific formula name, like a model of a car. The EQ FICO on here is a Beacon 5.0. This FICO version is used by most all mortgage lenders. The TU FICO on here is often officially called "FICO Risk Score, Classic 98". While millions of this FICO version are used each year, most lenders actually use a newer version called "FICO Risk Score, Classic 04". In other words, if you pulled your TU FICO from here and from your lender on the same day they probably won't match. Finally, myFICO used to provide an EX FICO. That was called "Fair Isaac Risk Model v2 or (II)". That's used by a majority of mortgage lenders out there.

 

And these are Classic scores. Lenders can pick and choose what FICO version they want to use. Some CC-issuers opt to use a bankcard-enhanced FICO which differs from the scores in here and weighs CC experiences and payment history moreso over other accts. Many auto dealerships, well, rather banks doing business with dealers, use an auto-enhanced FICO which weighs auto loan borrowing experiences. There are others like installment-enhanced scores and even mortgage-enhanced FICO scores which are very rarely used. And to confuse things there are model years like we see with TU (TU98 vs. TU04...and not to mention the newest TU08 version which is found via Wal-Mart if you have their CC and used by almost nobody).

 

 

 

 

 

 

Member
orenharel
Posts: 17
Registered: ‎02-13-2013
0

Re: Still Confused Regarding the Different Credit Scores

[ Edited ]

Thanks for the further clarification.

 

So:

1) The Equifax FICO score (aka "Beacon 5.0") is essentially the score provided via MyFICO.

2) The TransUnion score can be only found on this website (not their website) under the name "FICO Risk Score, Classic 98", although most lenders use a newer version called "FICO Risk Score, Classic 04", which cannot be found on any website. The 2 scores will vary.

3) The Experian score cannot be found on any website.

 

There will be differences between the FICO score between all 3 bureaus because of:

1) Slight differences in FICO calculation models

2) Slight differences in credit history

But otherwise, they should be pretty similar.

 

In addition to these "standard" FICO calculations, some lender will make their own calculations using slightly reweighted numbers based on the product the person is interested in.

 

Is this correct? If so, would it be easiest to stick to just one FICO score rather than try to check the others?

Moderator Emeritus
llecs
Posts: 32,869
Registered: ‎08-04-2007
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Re: Still Confused Regarding the Different Credit Scores


orenharel wrote:

 

Is this correct? If so, would it be easiest to stick to just one FICO score rather than try to check the others?


There are different versions created because each lender has their own needs. One FICO version may not be as good as a predictor of risk as another version because demographics, economies in one region to another, lending needs, changing economic conditions, etc. I've read that FICO will ask from the lender for a sampling of borrowers' data from the past and apply that data to a FICO version and based on that data the lender can determine whether or not a particular FICO version would have been a good fit for them.

Valued Contributor
dddewdrop
Posts: 1,060
Registered: ‎02-06-2013
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Re: Still Confused Regarding the Different Credit Scores


orenharel wrote:

Thanks for the further clarification.

 

So:

1) The Equifax FICO score (aka "Beacon 5.0") is essentially the score provided via MyFICO.

2) The TransUnion score can be only found on this website (not their website) under the name "FICO Risk Score, Classic 98", although most lenders use a newer version called "FICO Risk Score, Classic 04", which cannot be found on any website. The 2 scores will vary.

3) The Experian score cannot be found on any website.

 

There will be differences between the FICO score between all 3 bureaus because of:

1) Slight differences in FICO calculation models

2) Slight differences in credit history

But otherwise, they should be pretty similar.

 

In addition to these "standard" FICO calculations, some lender will make their own calculations using slightly reweighted numbers based on the product the person is interested in.

 

Is this correct? If so, would it be easiest to stick to just one FICO score rather than try to check the others?


The other major things about the scores are that 2 credit bureaus DCU in massachusetts and PSECU in philly have scores. PSECU has the real Exp fico score but everybody cannot get an account there.

0/10001100/13001346/16001699/2000Prepaid ,,Recent scores:FICO EX 632,EQ 635,TU 632...Link to my Rebuild Log
Member
orenharel
Posts: 17
Registered: ‎02-13-2013
0

Re: Still Confused Regarding the Different Credit Scores

I understand, thanks!


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