Clearing Up Credit Scores Confusion

By ccflyers on February 5, 2008

When you apply for a credit card your credit score is the major starting point for you to choose a plastic, no matter if it is a business credit card, a consumer card, or any other.
Credit card holders often face the problem of understanding the credit related lingo. There are so many confusing terms concerning credit and finances. A person with no special education can easily get mixed up with all those notions. Personally I a few years ago had problems with differentiating debit and credit cards. But, probably the greater part of confusion is caused by the term “credit score”.
There are no serious problems with understanding what a credit score is. The thing is that, first of all, there are three different names for this concept. Credit score, FICO score, and FAKO score. Ok. Let’s try to figure out what all of these notions imply and what are the differences between them.
A Credit Score
A credit score is a certain figure based on your credit files, or your credit history. Credit bureaus calculate your credit score using the information in your credit report. And then the bureaus sell it to credit card holders.
There are three major US credit bureaus with a good reputation: Equifax, Experian, and TransUnion. Here raises another problem – every bureau has its own variant of the credit score. PLUS – is the Equifax’s version, BEACON – is the Experian’s one, and EMPIRICA is sold by TransUnion.
But there is one more version of the credit score that has been developed by all three bureaus. This is something like Esperanto, a universal credit score that can be used by all of the three bureaus, which is called Vantage score. This version implies non-traditional forms of credit, such as utility payments or apartment leases.
FICO Score
The FICO score is the analogue of credit score, in fact it is the same thing. The FICO name comes from Fair Isaak company that has developed and is administering now this branded credit score. You know, comparing credit score and FICO score is like comparing bandage and Band-Aid.
FAKO Score
FAKO score is just any other credit score but FICO score. In case you buy your credit score from any other source but, it is called FAKO score.
The Difference
Actually, it is pretty hard to single out some specific differences between credit score versions, as we don’t know every bureau’s exact formula of calculating it.
Lenders and card holders use the same credit score. But it’s up to your creditor what credit score to turn to. It can be the FICO score, a credit bureau’s credit score, or it can be your lender’s own credit score. What you should take care about is to ask your creditor what credit score he or she appeals to. This will help you to avoid the undesirable misunderstanding when applying for loans or any types of credit cards, especially, good or excellent credit cards.
Which Credit Score Should You Head On?
Even if you make maximum efforts, you will not be able to improve all the credit scores. And, actually, you don’t need it. FICO score is a perfect basis when you work on your credit. In case you are trying to boost you FICO score FAKO scores will be good as well.
And, if you intend to apply for a loan it will be really useful to buy your credit scores from all the three bureaus. thus you will get the whole picture of your financial standing.

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2 Responses to “Clearing Up Credit Scores Confusion”

  1. Marie said:

    Credit score is the key factor that allows credit card issuers to make a decision whether to approve you or not. It’s really important to keep it positive!

  2. N_Dorothy said:

    Credit score, Fico score, Faco score, credit history, credit rating… Credit companies just want to confuse us with all those terms.

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