Creditnet Fico Score Explanation

Q "What is the difference between these two scores? Are there two separate algorithms? I've spoken to reps from two different financial loan institutions, and they've assured me that there IS a difference between your FICO score and your Beacon score.. hmmm..."

FICO is short for Fair Isaac and co. This company creates credit risk models.

Fact: Most basic credit scores are what is termed a FICO score. Only scores that takes the following criteria into account are considered FICO scores. http://www.myfico.com/MyFICO/Credit...FICOFactors.htm

Also consider that FICO scores ignore things like having a job, how much you make and your age. See http://www.myfico.com/MyFICO/Credit...FICOIgnores.htm

Now there are many versions of FICO scores and there are several basic types.

The three major types are: 1 FICO (used with credit cards). 2 Bankruptcy (used for mortgages and auto loans). 3 Profitability (used to see if they can make money off of you). Weed out the free riders.

Now there are three major credit bureaus and they all sell credit scores to consumers and lenders:

CRA name------Consumer score name---------------------Lender score name

Equifax------------Beacon/FICO score---------------------------Beacon

Experian----------Experian credit score-------------------------Experian/Fair Isaac Risk Model score

TransUnion------Trans Union personal credit score---------Empirica score

Now a real FICO score uses a scale from 300 to 850 where 661 or 681 is very good and great respectively. When a lender pulls a FICO report they get a FICO score on this scale that has a name that varies depending on what bureau they pull from. Each CRA sells 12-15 different kinds of credit scores.

Equifax's personal credit score is the same as the one they sell to lenders.

TransUnion sells consumers a score on a scale of 150 to 934.

Equifax sells consumers a score on a scale of 340 to 820.

Now if this is not complex enough, Fair Isaac could sell a mortgage company a risk score that would fall into the bankruptcy type. This would technically not be called a FICO score even though it came from Fair Isaac. This type is used to see the odds that you will declare bankruptcy and is used in applying for a mortgage. They usually pull all three of your FICO scores first and take the middle number. Then they plug in the data you give them about income, debt ratios Etc.

To make things even more complex, some lenders such as auto dealers are using older FICO credit scores on potential borrowers in conjunction with other data to come up with a number that means something to them and nothing to the rest of the world.