The Scoring Systems- An indepth view
Within the Fico scores sold to lenders you will find different names for each reporting agencies Fico score. For the most part Experian calls it Fair Isaac or Fico, Trans Union calls it Empirica, and Equifax calls it Beacon but sometimes you see Fico on 2 of the 3 reports. The reporting agencies just rebranded the names of the Fico score when it relates to the different agencies. There are also variations to the Fico score as well: Fico Classic 04, Fico 08, Fico Classic.
Other scores sold by Fico for various purposes are Fico Credit Capacity, Fico Expansion Score, and many more. Within each variation there are also different Models that are chosen by each lender through a pulling service that sells the score to the lender. The pulling service is a third party that gets the info from the three reporting agencies, Experian, Trans Union, and Equifax. They process this information through the Fico scoring formula and model to deliver the score to the Institution that is paying them a fee for the data. Just like any business if you limit yourself to one product it can inhibit your profits. When Fico offers many variations, with different reasoning behind the new choices, it gives them more opportunities to sell and make profits.
Credit Scores
The credit reporting agencies also offer their own scores (for educational purposes) to the general public. These scores are called Plus scores, Risk scores, and more recently there has been the Vantage Scores. The Plus scores range from 330 to 830 and and are usually 40 points higher then Fico scores. The VantageScore ranges between 501 to 990 and has a letter grade rating as well. The Fico scores range from 300-850. When you order your scores from sites online such as annual credit or free credit report (if they don’t say Fico scores) they are usually around 40 points higher then Fico. The Vantage score was not only created to educate the general public but was introduced to compete directly with Fico by selling to lenders as well. To give you some insight into the numerical difference of these scores if all things were equal a Fico score of 750 would translate into a Vantage score of 850-901.
Complex isn’t it? It is complicated but hopefully you have a little insight into the variety and differences of numerical scores. Going back to Vantage Scores, when Experian tried to get a percentage of Fico profits from selling its info to the consumer Fico said NO! In Feb. 2009 Experian declared it would no longer allow Fico the use of it’s info to sell Experian Fico scores to the consumer. If you went to myfico.com to order your Fico scores you would no longer be able to buy your Experian Fico score. We will continue to write, in more detail, about models, scores, and variations in the coming 4-5 weeks. Feel free to call us if you have any questions.
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