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FICO vs FAKO: Are You Getting the Right Credit Score?

Anyone who has ever applied for a loan, regardless of the type, has probably been told that the lending institution will have to “run their credit.” The latter is a phrase that refers to obtaining the applicant's credit score in order to determine whether or not the individual is a good credit risk. This is often referred to as the person's FICO–Fair Isaac Company–score. This score is what virtually all lenders use to determine how likely it is that a specific borrower will default on a loan or other financial obligation, as well as whether or not the person will make timely payments on loans or other lines of credit.

FICO Scores

A FICO score reports on a variety of actions that prospective borrowers have taken, including payment history, accounts owed, length of credit history, new credit, and types of credit used. Each action of this type is “weighted” differently, based on the system used by FICO. It is important to understand, however, that a client's score may differ when pulled individually from each of the three credit bureau reporting agencies. This is because all three bureaus (Equifax, TransUnion, and Experian) record slightly different information on applicants. Therefore, all three reports will not necessarily contain identical information.

FAKO Scores

FAKO refers to any credit score that is not a FICO score. FAKO scores are normally for educational purposes, but they can be unreliable or misleading. Although they seem to help a consumer, the scores themselves are not as accurate. As a result, it is important not to rely on a FAKO score to see where you stand. These scores will normally be inflated, or higher than your FICO score. And most lenders only use FICO scores in determining loan rates and other types of credit. 

Choosing the Best Source From Which to Obtain a Credit Score

Knowing one's credit score is essential for wise financial management. However, consumers need a thorough understanding with regard to which sources are authentic and which are “fake,” as this will eliminate a considerable amount of wasted time and frustration. 
A person can obtain his or her Fair Isaac Company Score for a nominal fee, but many individuals pursue other avenues through which to obtain this score. However, in most cases, companies who offer “free” FICOS are often merely providing something that has been dubbed a “FAKO score” by certain individuals. It has earned this name because this score is not one's authentic Fair Isaac score. Many times, consumers are required to enroll in trial offers for credit monitoring or other services to receive this supposed score, which in many cases is nothing more than one's free annual credit report. The latter is something one can obtain without having to sign up for services or trial offers.
In other cases, these scores are acquired from agencies that have designed their own method of scoring, and may appear at first to be very similar to the traditional, authentic Fair Isaac score. Some of the best-known companies offering such scores include TransRisk and VanatgeScore. Although they are legitimate companies, and can provide consumers with a general overview of their credit worthiness, they do not necessarily tell such individuals how they are seen by lenders. For this reason, purchasing such reports, or even obtaining such a score for free, may be of little or no benefit to the consumer.

Obtaining Information from Lenders

If an individual was denied credit or was not offered the best possible terms, he or she may be given the actual score from the lender. However, it is important to understand that lending institutions are not obligated to tell prospective borrowers their score, but rather have the option of simply informing the individual about the credit scoring technique that was used and the basis for the applicant's denial.

Going to the Appropriate Source

Once a person understands the differences outlined above, he or she can avoid wasting time or money on a “FAKO” score. Fortunately, all consumers must do is make sure they obtain their Fair Isaac score directly from FICO's website. They can also obtain their score from each of the three credit bureaus each year from AnnualCreditReport.com. Ultimately, the best course of action for virtually all consumers is to go to the official FICO score site or AnnualCreditReport.com to obtain this information.

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Elisabeth Chan's picture

Elisabeth Chan is Creditnet's resident credit card expert. Elisabeth graduated Magna Cum Laude from Brigham Young University's Marriott School of Business.

When she's not rating and reviewing credit cards, Elisabeth enjoys gushing over her daughter (who is her exact clone), eating out (sushi and Chinese are favs), or attempting to conquer the pilates reformer machine (so far, all attempts have been futile).

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