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| FICO Score and Its Competitors |
| Written by Fiona Gu | ||||||||||||||||||||||
 Credit scores are used to help lenders evaluate the creditworthiness of borrowers. There are several credit scoring systems available but the most adapted one is the FICO score. Below is a list of the different credit scoring systems: FICO Score FICO, which stands for Fair Issac Corporation, is the leader in decision management. The company helps its clients to enlarge customer loyalty and profitability, reduce fraud loss, administer credit risk, achieve regulatory and competitive demands, and quickly accumulate market share. FICO has developed the most widely used credit score called the FICO Score. FICO scores are used to measure credit risks. Leading banks, credit card issuers, insurers, retailers, healthcare organizations and other companies all rely on FICO scores to better measure their risk and manage their financial status. You can buy the FICO Score from myFICO.com and Equifax’s website. Experian and TransUnion only sell FICO scores to lenders who request them, and not to consumers. VantageScore VantageScore is created by the 3 Credit Reporting Bureaus (CRBs) in 2006. It was the first time that all 3 CRBs worked together to generate a model that can score consumers consistently among all 3 bureaus. Before the VantageScore, each of the CRBs had their own scoring systems: Equifax ScorePower, Experian PLUS score, and TransUnion Credit Score.
This is a score that comes with the purchase of other Experian credit products such as Experian Credit Report and Score. You cannot buy this score alone. NextGen Score NextGen Score is a credit scoring system designed by the FICO Company. It assesses consumers’ credit risk. It is very similar to the FICO score in the way of usage and over-all design. However, Next Gen Score is not as widely used as the FICO score. CE Score CE Score is a score that is designed for consumers (very similar to the FICO Score and NextGen Score). However, CE Score is published by Community Empower and it is not as widely used as the FICO Score. Credit Karma Score Credit Karma Score offers a free credit score service. Based on your credit profile and score, it would give you access to appropriate company offers. Below is a table that highlights the differences between various credit scoring systems:
Be Aware of Different Credit Scores Coming with Your Package There are many companies and websites selling credit scores, however most of which are never used by lenders. Only myFICO and Equifax sell the actual FICO score. TransUnion and Experian offer their own version of credit scores but they are not the FICO score. However getting non-FICO scores is not a bad idea. They could be cheaper and should point to the same direction as your FICO score. Therefore non-FICO scores can still service your need to keep track of your credit. Just make sure that the source you obtain your score from is reliable. It is also highly recommended that you check your actual FICO score before applying for a loan as most lenders base the rates on your FICO score! When lenders bring about your “score,” they mostly refer to your FICO score. In fact, you have three different FICO scores developed for each of the three credit bureaus (Experian, Equifax and TransUnion). Even though Fair Isaac’s scoring systems have tried to make the scores consistent and only vary within a few points among the three credit bureaus, your scores might differ primarily because the scoring models for each credit bureau were developed separately. It could also be the case that your lenders did not supply exactly the same information to the three credit bureaus or because your lender did not report the same information to the credit bureau at the same time. Another possibility is that you have accounts under different names (for example, William Lee versus Bill Lee). For the last two cases, you might need to resolve the issue with both your lenders and the credit bureaus. Leaving this problem unsolved may result in big discrepancies in the future. |
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| Last Updated on Tuesday, 21 December 2010 17:24 |
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