What’s the difference between FICO™ Scores and the ‘free’ credit scores advertised on the Internet and television? The short answer is that lenders (especially home loan lenders) use only FICO™ Scores to evaluate your credit. The advertised FAKO sites are a waste of both your time and money and they may put your private information at risk. Consider this as you think of the fake scores, would you want a watch that only gave you the approximate time? Would you trust a banker that let anyone buy your private information?
There are three national credit repositories known as credit reporting agencies. TransUnion, Equifax and Experian. All are for profit corporations. All have an agenda which is to sell you a subscription to something you truly do not need. They wish to sell you, among other things, access to useless monitoring services and FAKO scores. Lenders do not use FAKO scores.
There is a big difference. As reported by the Consumer Finance Protection Bureau, Buyer Beware!
FICO™ or FAKO Scores
Question: From which of these sites can you obtain FICO™ Mortgage Scores?
Answer: This is a trick question. None of the above sites provide FICO™ Mortgage Scores. These are all what I call FAKO Scores. Note: This list is not complete.
What does FICO™ stand for? FICO™ is the company originally known as the Fair Issac Company which developed the mathematical models to predict credit behavior based on current and past credit usage. This company is as protective of their proprietary information as is Coca Cola of its formula.
You can obtain a free copy of your credit reports annually by logging onto this government created site free annual credit report. While these reports contain the information on your credit reports, they do not contain your FICO™ Scores. To obtain your FICO™ Scores, you will need to purchase your FICO™ Scores as explained below.
How can you get a copy of my credit report with the mortgage FICO™ Scores? You can get a copy of all three of your mortgage FICO™ Scores with the error codes (very important) from only one place – your favorite mortgage loan originator (banker or broker); they may not mark up the price you pay for the tri-merged reports including your FICO™ Scores. The company myFICO can provide access to all three FICO™ Scores however it is quite likely that these will not be the same version of FICO™ Scores as used by mortgage lenders. The fact is that mortgage lenders use your middle FICO™ Score. This leaves you with the risk of not knowing where you stand until your mortgage professional pulls your tri-merged credit report.
The marketers of the generic scores are almost as good at marketing as the bottlers of “brand name” tap water.
You can you get an idea of what your FICO™ Scores are without spending any money? The short answer is FICO™ Scores are not free. You can, however, use the FICO™ Score simulator to get a good idea of what your FICO™ Score range. I preface this with a word of caution; the FICO™ simulator will act as any computer program, in other words garbage-in = garbage-out. The free FICO Score Estimator will give you a fair idea of your FICO™ Score range.
In September 2012 the Consumer Finance Protection Bureau released a 42 page report explaining in great academic detail much of what I touched on in this blog. Twice now, CBS 60 Minutes has reported on the situation of ego scores vs. the scores lenders use.
Be aware of the data miners which are, through these type of services, tracking what you are doing regarding credit. All of the above are data miners and will obtain Non-Public Personal Information (NPPI) from you. Are you sure their business is hacker proof? The Federal Trade Commission found that at least one of these business exposed NPPI. Do you want them to have your Social Security Number and other personal information for life?
On to reality, I strongly urge you to read this brief post to learn how it is the FICO Score is built. Knowing this and understanding how to interpret this information is your key to rapidly building and maintaining a good credit score and be on the way to building a great credit score.
- Deceiving consumers about the value of the credit scores they sold: In their advertising, TransUnion and Equifax falsely represented that the credit scores they marketed and provided to consumers were the same scores lenders typically use to make credit decisions. In fact, the scores sold by TransUnion and Equifax were not typically used by lenders to make those decisions.
- Deceiving consumers into enrolling in subscription programs: In their advertising, TransUnion and Equifax falsely claimed that their credit scores and credit-related products were free or, in the case of TransUnion, cost only “$1.” In reality, consumers who signed up received a free trial of seven or 30 days, after which they were automatically enrolled in a subscription program. Unless they cancelled during the trial period, consumers were charged a recurring fee – usually $16 or more per month. This billing structure, known as a “negative option,” was not clearly and conspicuously disclosed to consumers.
HOUSINGWIRE News March 23, 2017,”CFPB fines Experian $3 million for lying about consumers’ credit scores. Told consumers that purchased credit scores were same ones that lenders used.”FAKO image attribution Diet water image attribution 60 Minutes image attribution Financially Speaking™ James Spray, CNE, RMLO, FICO Pro CO LMO 100008715 | NMLS 257365 | September 18, 2010 | Revised March 23, 2017 Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.