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Credit Repair: What's The Score?

Mar 13, 2008
So Many Scores

Credit scores can be confusing. FICO, TrueCredit, PLUS, Beacon, and Empirica scores are all in daily use. Why are there so many scores? A nationally recognized credit repair expert explains the different scores and how they can impact your life.

FICO, the Score that Counts

There are many credit scores available, but the FICO score is the one that matters. FICO, by the way, is an acronym for Fair Isaac & Company, the creator of the scoring model. Virtually all lenders use FICO scores to make loan decisions. If you are in a credit repair program, any score you monitor is fine for measuring progress. But if you are planning to apply for a loan the FICO score is the one to watch.

FICO and Your Lender

When you apply for a loan, the lender orders your credit report from one (or more) of the three credit bureaus, Experian, Equifax, and TransUnion. Each credit bureau report comes with a FICO score. If you speak with your lender about your credit, they are likely to refer to each of your scores using the specific credit bureau name.

The Credit Bureau Illusion

Given the constant association of FICO scores with the three credit bureaus, you might assume they have some proprietary claim on the scores. You might also assume that if you purchased your scores from the credit bureaus, you would get the same FICO scores the bureaus sold to your lender. You would not be alone. In the credit repair business, we find most of our customers make the same assumptions. The assumptions are wrong.

Credit Score Re-Branding

As an aside, I should mention that the three bureaus have re-branded the FICO scores they sell to lenders. Equifax calls it a Beacon score, TransUnion calls it an Empirica score, and Experian calls it an Experian Score. Different names, but they are all FICO scores. Our credit repair customers often ask about numeric differences in the scores. Numeric differences arise because each bureau gets information from a slightly different mix of creditors. Timing also plays a roll in score variance; a recent change in your credit may be picked up sooner at one bureau than another.

The Business of Credit Scores

As it happens, the credit bureaus don't own the FICO scores, nor do they sell them directly to consumers. Fair Isaac & Company owns the scoring model and licenses it to the credit bureaus. The credit bureaus use the model to score the data they have on file for consumers. Then they bundle the scores with consumer credit reports and sell them to lenders. Fair Isaac collects royalties from the credit bureaus for these sales.

Putting Credit Scores to Use

If you are planning to apply for a loan, you might want to purchase your FICO scores beforehand. You would want your real scores, not "estimated" scores that might vary widely from the ones the lender will use. Yet "estimated" scores are exactly what millions of consumers get every year when they visit the credit bureau's websites. Many of these consumers go on to apply for a loan, and are disappointed when the lender tells them that their scores are lower than they were led to believe. We hear this story almost every day from people starting up their credit repair effort.

Estimated Scores

Fair Isaac would have been happy to have the credit bureaus sell FICO scores directly to consumers. The credit bureaus, however, seeing the opportunity, developed their own "estimated" credit scores rather than paying royalties to Fair Isaac. Equifax, the exception, offers a FICO score to consumers, which provides an economical way for consumers, or anyone in a credit repair program, to monitor their score, but on its own does not provide a complete solution.

Experian's PLUS Score

Experian sells a credit score at their website called the "PLUS Score". Here is the small print from their website, "Your PLUS Score is formulated using the information in your credit file. It is modeled after the hundreds of commercial credit scores that help potential lenders, landlords, and employers quickly gauge your credit history and decide what kind of a risk they might be taking if they approve your application."

TransUnion's TrueCredit Score

TransUnion sells a credit score called the "TrueCredit" score. Here is the small print from their website. "TrueCredit" is not connected in any way with Fair, Isaac and Company; the credit score provided here is not a so-called FICO score. The credit scores of TransUnion may not be identical in every respect to any consumer credit scores produced by any other company."

Equifax FICO Score

Equifax, as mentioned, makes a FICO score available to consumers. If you are in a credit repair program, or planning to apply for a loan, this is the most economical way of seeing a real FICO score. But it is important to know that many lenders, and almost all mortgage companies, look at all three of your FICO scores, and base their decision on the value of your middle score. One score is simply not enough.

Myfico.com the FICO Source

So, if you want to know where you stand prior to applying for a loan, or to monitor your credit repair efforts for each credit bureau, you will need to see all three FICO scores. These are available at myfico.com, The Fair Isaac website.

Copyright 2007 James W. Kemish. All Content. All Rights Reserved.
About the Author
Jim Kemish, a nationally recognized credit repair expert, is the president of Sky Blue Credit, a leading credit repair business since 1989. Jim is also the president of Power Mortgage, a Florida mortgage company.
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