FICO credit scores are used by most lenders when making credit decisions. The FICO score is the one you want to familiarize yourself with before applying for credit. However, there are many different credit scoring models, and consumers can easily get confused about the score they are receiving from some sources.
FICO Credit Scores are King
You've probably seen an advertisement or gotten a spam email. Consumers are being pounded by offers to get their credit scores for free online. However, FICO wants to caution consumers about the truth behind offers like that.
In a recent blog post, James Wehmann of FICO stressed that the websites making these offers aren't providing FICO scores. Meaning, consumers are looking at scores that very few credit decision makers use.
Many of the credit scores offered by such websites are VantageScores. This model was developed by the three national credit reporting agencies — Equifax, TransUnion and Experian. And FICO warns that VantageScores are no substitutes for their own scoring model.
Many consumers believe other credit scores can easily be compared to FICO ratings because they work similarly. According to new research from FICO, this is not the case.
For example, FICO has nine versions of the FICO score that are used at each of three national credit bureaus. Their research shows that the average difference between consumers' high and low FICO score (from a single credit bureau) is 62 points. They also found that 10 percent of consumers have a score difference of 100 points or more.
Imagine comparing your VantageScore to each FICO score version. It stands to reason that an even greater difference would exist. Combined with the sheer fact that most lenders use FICO, the company wants it to be known that there is no substitute for their scoring model.
Consumers are Confused
FICO research, unsurprisingly, shows that consumers are often confused regarding the scores they receive.
- 85% of consumers who get scores from non-FICO using websites think they are getting a score widely used by lenders.
- About 65% think they're getting a FICO score when they actually are not.
The impact here is that millions of consumers believe their credit score is something different than what current and prospective lenders are actually using to evaluate them.
This could lead some people to not apply for a mortgage or auto loan because they mistakenly think they will not be able to qualify. Others' credit applications could be denied because they think they have a higher score than they do.
So, it is important to understand that there are many different scoring models. It's also critical that consumers understand that FICO scores are the ones used by the majority of lenders. And just so you know, there are ways to see FICO credit scores for free.
That's not to say that all of these third-party sites that offer credit scores don’t have value. Some are very helpful for consumers. For example, Credit Karma, in addition to offering consumers a look at their VantageScore, also breaks down the key credit scoring factors. They give you a look into how you are doing with these factors, and even offer suggestions on how you can improve in certain areas.
Just keep in mind that the credit score you are seeing is not the one a lender will use when evaluating your application.
The Bottom Line
Your credit score is what lenders use when making decisions. And, most of the time, those lenders are using FICO scores. So, before you apply for your next loan or line of credit, it can help to take a look at your FICO score so you know where you stand.
If you need an auto loan but are worried that your credit will keep you from getting approved, Auto Credit Express can help. We have a network of car dealerships that are trained in special finance. When you work with us, we connect you with a local dealer that is equipped to handle unique credit situations.
Start the process today by filling out our simple and secure online auto loan request. There's no obligation to purchase anything and our service is completely free, so you have nothing to lose.
