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Strange article on Fako? Please confirm....

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Anonymous
Not applicable

Strange article on Fako? Please confirm....

Hello everyone,

I've been doing a lot of reading and google searches which land me back to these forums, which have helped me tremendously, and I just wanted to thank everyone ahead of time for their informative answers and helpful attitude. While researching fakos, I came upon this article here:

http://money.msn.com/saving-money-tips/post.aspx?post=5f6f6067-d9db-4f2c-b4d5-f3451b06e358&_p=c350db...

 

From what I could tell, I noticed several glaring errors in the author's logic and was unsure whether or not his information was correct. I did some calculations and then wrote a reply, which can be seen as the only reply on the bottom of the page. I'm really not sure if I'm just reading the article wrong or my logic is off the mark bigtime, or if the information presented in the article is really wrong. Would anyone care to look at the article and my reply in the comment section and give me their opinion? It would be greatly appreciated, thank you!

Message 1 of 12
11 REPLIES 11
Revelate
Moderator Emeritus

Re: Strange article on Fako? Please confirm....

TLDR: He's right and he's wrong, like pretty much all of us.  Scores are sort of bunk, the report matters, myFICO forum is likely the best public resource for optimizing one's report.

 

The long rambling version:

 

His own FAKO scores = his FICO scores, pretty much luck that they were so close.  In general, people with good to excellent credit (his credit is) will probably be closer than those of us who have blemishes on our reports or a short history.  That's anecdotal from what I've been able to infer from individuals here on their records.  This makes rational sense as everyone should want to lend to that article's author, so his scores (assuming similar score ranges, which they are absolutely not in all FAKO cases) should be close.

 

As a result, claiming that FAKO scores truly are educational is a little misleading, and while I agree that CK et al. can give some useful information (like the CK report card for complete newbies, it's not a complete picture but it's certainly not a *bad* picture); however, in some cases their recommendations are way off the mark so it's sort of hit or miss there.

 

That said, he does make the salient point which I and maybe one or two others routinely make on this forum: not all FICO's are created equally either.  Sure, you can get your FICO scores from myFICO, and some other places, but we really only have access to 4-5 different legitimate scores, and there's on the order of 36 potential ones that lenders might pull (3 versions, 98, 04, 08, and 4ish industry options - normal, mortgage/auto/credit enhanced from all three bureaus = 36 combinations).  It gets worse knowing that many lenders can pull multiple bureaus if they wish, or use their own internal scoring systems, and others still will use a comparitive one-off like a Vantage score.

 

Now I do believe there's some value in knowing your actual FICO score; personally I think of the scores obtainable for anyone not resident in the state of PA, the EQ Beacon 5.0 score from either myFICO or Equifax directly (if you manage to navigate to the right one there) are the most worthwhile as right now it's guarunteed those will be used as your Equifax score on your mortgage application: The GSE's (Fannie/Freddie) have effectively set this in stone currently.

 

Every other loan product, is very much Your Mileage WILL Vary.

 

So personally I think the best practice is to keep on top of your reports, and make certain they're as clean as possible: the freebie sites that give access to your TU and EX report data are almost enough themselves for that.  The scores, including FICO ones, I mostly just let fall where they will as a result, and I don't pull them that often other than the free EQ I get from my old CU which I use for tracking.

 

For what *should* be on the report though, I make heavy use of the information found on this forum as in my opinion, there's very few, and possibly no better publicly available resource on the subject.

 

 




        
Message 2 of 12
llecs
Moderator Emeritus

Re: Strange article on Fako? Please confirm....


@Anonymous wrote:

Hello everyone,

I've been doing a lot of reading and google searches which land me back to these forums, which have helped me tremendously, and I just wanted to thank everyone ahead of time for their informative answers and helpful attitude. While researching fakos, I came upon this article here:

http://money.msn.com/saving-money-tips/post.aspx?post=5f6f6067-d9db-4f2c-b4d5-f3451b06e358&_p=c350dbbd-c584-493c-bddb-57e833de708e&_nwpt=1

 

From what I could tell, I noticed several glaring errors in the author's logic and was unsure whether or not his information was correct. I did some calculations and then wrote a reply, which can be seen as the only reply on the bottom of the page. I'm really not sure if I'm just reading the article wrong or my logic is off the mark bigtime, or if the information presented in the article is really wrong. Would anyone care to look at the article and my reply in the comment section and give me their opinion? It would be greatly appreciated, thank you!



The author is off-base in his analysis and here's why:

 

1) The author is assuming that all 3 credit scores should match.

 

Ideally, it'll be cool if they matched, but they never do. They don't match because, 1) the FICO formula isn't the same across all 3 CRAs, and 2) all 3 CRs, when lined up side-by-side, very rarely match. Even the slightest variances like a difference balance, CCs updating on one before the others, different inquiries, lates reporting on one but not the other, different accounts, different dates, etc., all can throw the FICO score off by just a few points all the way into the triple digits, depending on the differences. For example, on a clean report, a new collection on one could mean a 100+ point difference in score. Obviously the latter doesn't apply to that author, but any of those differences can easily throw off his results.

 

2) The author is applying results from Experian to compare results from Equifax and TransUnion.

 

He doesn't mention Experian FICO results within his article for whatever reason (I wonder if his EX FICO from his lender would have skewed his results), but he posted two FAKO scores that apply to Experian only. These are from Quizzle and Credit Sesame. Like in the above, you cannot look at your Experian CR and assume it's exactly the same as EQ or TU. IMO, you cannot compare a FAKO to a FICO for reasons I'll mention in a sec., but you especially cannot compare an EX FAKO with an EQ FICO, for example. He's doing that in his analysis by including EX FAKOs into the mix. Since he's doing that, would it be fair for me to say that his EQ FICO from myFICO is 45 points lower than his CE Score from Quizzle? Using his logic, does that lend support to his premise? 45 is quite a bit of a difference.

 

3) The author is assuming that FAKO scores are accurate in relation to FICO scores.

 

FAKO does not equal FICO. FAKO does not equal FICO because, 1) the score ranges differ across all FAKOs and in relation to FICO and 2) FAKOs factors in stuff that FICO does not and vice-vera.

 

The ranges vary across all FAKOs. Some ranges are 330-830, 350-850, 300-900, 501-990, and many more, but FICO Classic scores are 300-850. Because the ranges differ, the scores will differ. It's impossible to get an accurate reading. Also, FICO factors in stuff that FAKOs do not, like scoring buckets, FICO ignores duplicate mortgage and auto inquiries, and so on. Also the breakdown of what makes up the FICO is vastly different than what FAKOs consider a good score makeup. Then there are other differences. For example, FICO ignores inquiries after a year and most, if not all, FAKOs do not. Some FAKOs factor in collection agencies into your length of history (TransRisk does that). FICO does not do that. If AAoA is considered, FAKOs treat it differently than FICO. For example CreditKarma calculates AAoA on open accounts only which is included in the TransRisk FAKO at least. My AAoA right now between FICO and CK is a healthy 3 years. FICO tends to weigh CC util differently (see my experience from going from 89% to 1% w/ FAKO comparisons), and FAKOs treat charge cards and NPSL CCs differently than FICO. Because ranges differ and items that make up the score differ, there's no comparing them.

 

4) The author is assuming that what is true of the parts is true of the whole.

 

Scores can change daily. The author did not pull from myFICO and from his lender on the same day which accounts for the FICO differences. But in comparing a FAKO with a FICO, you cannot accurately compare over the course of one day. For accurate results, you have to compare over months for a fair comparison. I'll be the first to admit that my FAKOs have matched my FICOs when pulled the same day....over the course of a day. And there are other times I compared the exact two same scores on the exact same day, months later, and found that the scores have been 20-40-60-100+ points off, despite matching or nearly matching just months prior. Because FAKOs don't factor in stuff that FICO does, and vice-versa, you have to narrow the error out by comparing them over a lengthly period. I bet $10 that if the author repeated this process via comparing 6 months from now, he'd see different results.

 

5) The author is assuming there's only one FICO score.

 

The author is assuming that all FICO scores are the same. As mentioned previosuly, they are not. It's well known among us that virtually all lenders use the same EQ FICO as on here, but lenders are a mixed bag when it comes to TU. A very small number still use the TU FICO as on here and most use a newer version we dub TU04. When the author did his analysis, he pulled one time from TU and it's highly likely that his lender used TU04 vs. the TU98 he purchased from myFICO.  He's not accounting for that difference. Of course he's comparing a FAKO to a FICO so I guess it doesn't matter anyway.

 

6) The author is assuming that if your FAKOs are OK, then your FICO scores will be too.

 

This is a terrible assumption we see here everyday. Posters come on here after visiting sites like CreditKarma only to learn their FICO scores were totally different. Worst yet, there are posters who rely on sites like CK, Credit Sesame, and Quizzle and apply for a mortgage thinking their FICOs were the same only to learn their FICOs were much lower and they don't qualify. Look over in the Mortgage Loans board or even in this one and daily you'll see posts like those. My heart goes out to them, but FAKOs give a false sense of security when you need it the most.

 

In conclusion, I typed too much. Ignore FAKOs.

Message 3 of 12
Anonymous
Not applicable

Re: Strange article on Fako? Please confirm....


@llecs wrote:

 

In conclusion, I typed too much. Ignore FAKOs.


LOL!!!  +100 Smiley Happy

Message 4 of 12
Anonymous
Not applicable

Re: Strange article on Fako? Please confirm....

Thank you everyone for your replies, and a major shout out toIIecs for the superb point by point argument. Yeah the first part of the article I understood quite well, but it was when he started spouting out the numbers that I noticed his reasoning was off and even plain out faulty. I had no idea why he was comparing the differences between the EQ and TU scores...then later on he said that the CreditKarma score was closer to his actual TU lender pull than his myfico TU score...when the opposite was true according to his numbers. He also used creditsesame and quizzle as examples when he was discussing his EQ and TU scores, when those are TU based. That article was all over the place, lol. Thanks again. I got my EQ Fico from scorewatch on this site, and I'm going to pull my TU from this site shortly as well. My Experian score (shown in my signature) was based off a rejected card application from three months ago...they stated my score in the denial letter and said the score was from Experian. Is this an accurate indication of my true EX FICO? That score was based upon when I was at 90 percent utilization and had 4000 less in credit limits, so I am hoping that my score would be considerably higher than that now.

Message 5 of 12
RobertEG
Legendary Contributor

Re: Strange article on Fako? Please confirm....

Tell me it cant be so....!!!

The press being inaccurate?

Message 6 of 12
Anonymous
Not applicable

Re: Strange article on Fako? Please confirm....

The horror!!! Smiley Happy


@RobertEG wrote:

Tell me it cant be so....!!!

The press being inaccurate?


 

Message 7 of 12
llecs
Moderator Emeritus

Re: Strange article on Fako? Please confirm....


@Anonymous wrote:

My Experian score (shown in my signature) was based off a rejected card application from three months ago...they stated my score in the denial letter and said the score was from Experian. Is this an accurate indication of my true EX FICO? That score was based upon when I was at 90 percent utilization and had 4000 less in credit limits, so I am hoping that my score would be considerably higher than that now.



YMMV. Some CC creditors use the same EX FICO that mortage lenders use (and the same here before Experian did away with it). Most of these are smaller banks and CUs. Bigger lenders tend to use a CC-enhanced FICO that weighs your CC experience more. Other larger lenders, like GECRB, use their own internal score vs. FICO.

Message 8 of 12
Anonymous
Not applicable

Re: Strange article on Fako? Please confirm....


@llecs wrote:

@Anonymous wrote:

My Experian score (shown in my signature) was based off a rejected card application from three months ago...they stated my score in the denial letter and said the score was from Experian. Is this an accurate indication of my true EX FICO? That score was based upon when I was at 90 percent utilization and had 4000 less in credit limits, so I am hoping that my score would be considerably higher than that now.



YMMV. Some CC creditors use the same EX FICO that mortage lenders use (and the same here before Experian did away with it). Most of these are smaller banks and CUs. Bigger lenders tend to use a CC-enhanced FICO that weighs your CC experience more. Other larger lenders, like GECRB, use their own internal score vs. FICO.


Thank you for the reply. Smiley Happy

Message 9 of 12
Crashem
Valued Contributor

Re: Strange article on Fako? Please confirm....

Not sure if I agree with some of the posts from earlier, but the author is off base.

 

1) The big problem I have with his "test" is that he seemed to have pulled his lender provided scores and then pulled FICO/FAKOs afterwards.  He should have done it the other way around.  By pulling lender scores first, he is adding inquiry which would reduce his score.

 

2) The author is trying to make a point but doesn't really give key pieces of information that a reader would need.  As one poster pointed out, those with great credit history will tend to find their scores vary less.  Virtually all mortgage lenders use FICO 04.  Myfico sells TU98 and EQ04.  Some of the fakos he pulled have different ranges than their FICO equivalents so same score = different score.

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Message 10 of 12
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