New York (PRWEB) August 5, 2009
According to CreditFYI.com, a leading educational consumer website on consumer credit and fraud, there are three types of FICO credit scores, not just one. These three FICO credit scores come from the credit-reporting agencies Experian, Equifax and TransUnion. The three scoring systems and methods are based on scores provided by FICO (formerly known as Fair Isaac Corporation). Although the credit-reporting bureaus have also introduced their own versions of the credit score, FICO scores are most commonly used by lenders and generally range from the low 300s to the mid-800s (higher is better). Most people therefore actually have three FICO scores -- one score from each of the three major credit bureaus.
FICO is a New York Stock Exchange Company (NYSE: FIC), founded in 1956 as Fair Isaac by engineer Bill Fair and mathematician Earl Isaac. It provides consulting services and enterprise decision management systems. They developed the FICO scores, a measure of credit risk, which are the most frequently used credit scores in the world. The FICO score has become so widely used that it's now considered the "de facto" standard. This means that when financial institutions talk about a credit score, they usually mean your FICO score.
Because credit scores are used by most lenders to determine your credit risk when you apply for a loan, credit card or line of credit, credit scores -- and the credit history they're based on -- can help you qualify for the most attractive interest rate and terms the next time you need to finance a purchase.
Making things even more confusing, the three credit bureaus sell FICO credit scores under different names. Equifax markets a BEACON score, Experian uses the name "Experian/Fair Isaac Risk Model," and TransUnion calls its FICO credit score EMPIRICA. (As of February 2009, Experian no longer makes its FICO score available to consumers, although lenders continue to use it.)
The three credit-reporting companies also jointly introduced yet another credit score, called VantageScore, to compete with FICO's score, which currently commands a large market share.
One site that provides a free seven-day trial of all three credit scores is FreeScore.com.
"You need to make sure you're comparing apples to apple when looking at credit scores," advises Rob Wyse, spokesperson for CreditFYI. "Often, people may see their FICO score and then purchase a different score later. They're frequently shocked to discover that the two scores differ substantially, because they're not aware that different scoring formulas are used for each."
For more information on credit scores, visit: http://www.creditfyi.com/Credit-Reports/Credit-Scores/why-you-have-three-different-credit-scores.htm
CreditFYI.com is a leading educational consumer website on consumer credit and fraud. For more information, go to http://www.creditfyi.com.