When people tell you let’s check your score, this is what they mean. They don’t mean your score at Credit Karma, Credit Sesame or dozens of other scores developed by clever marketers, including the ones from major credit bureaus. Understanding the difference between FICO and every other score in existence (nicknamed FACO) is important, because relying on your FACO score can cost you dearly at a critical moment.
FACO scores have no bearing on the decisions made by financial institutions, your potential employer, your insurance company, or your utility providers. Who can you impress by a FACO score? Your potential landlord, your girl- or boyfriend, and yourself. That’s about it! So let’s not waste our time talking about FACO here, but with one qualification.
Your subscription to services like Credit Karma and Credit Sesame gives you an access to free monitoring service that I find pretty good and consistent. If something bad happen, they will let you know, so totally useless, these services are not! Just don’t let that 3-digit number upset you (or get into your head).
So what about it, FICO score? What about it is that it’s not it. It’s they. Unfortunately, FICO scores are not easy and straightforward, and they use technics of their own. Let’s try to make sense of it in the easiest way: chronologically.
1. FICO made their first general purpose scores called Beacon in 1989. Within the next two years, Beacon was adopted by all three credit bureaus:
- BEACON at Equifax;
- EMPIRICA at Trans Union;
- The Experian/FICO model at Experian” (source: Fico.com).
2. The names for FICO next model in 1998 were as follows:
- Beacon 96 at Equifax;
- FICO Risk Score, or Classic 98 or TU-98 at Transunion;
- FICO 98 at Experian (source: http://ficoforums.myfico.com).
3. It’s next score model came in 2001 and was implemented under the following names: “Pinnacle at Equifax, PRECISIONsm at TransUnion and Experian/FICO Advanced Risk Score at Experian” (source: Fico.com), but it hadn’t caught up with the banks and was abandoned.
Like my color-coding so far?
4. The next model arrived in 2004 and was adopted by the credit bureaus under the following names:
- Beacon 5.0 or EQ-04 at Equifax;
- FICO Risk Score, Classic 04, or TU-04 at Transunion;
- The Experian/FICO Risk Model v2, or FICO II, or EX-04 at Experian (source: http://ficoforums.myfico.com).
5. The latest model FICO 8 (or 08) was introduced around 2008-2009 under the following names:
- Beacon 09 or EQ-08 at Equifax;
- FICO 8 Risk Score, Classic 08, or TU-08 at Transunion;
- The Experian/FICO Risk Model v8, or EX-08 at Experian (source: http://ficoforums.myfico.com).
Is your head spinning yet? Don’t worry, it gets easier (well, slightly).
As you have probably guessed by my bolding/unbolding, not all of these formulas are in use, or at least in common use. The only FICO model from bygone days that is still in use (and by bygone I mean 1998) is from Transunion.
If you are a Barclyacard holder, you probably know that you have an access to your true FICO score for free. The model it uses is this:
- FICO 8 Risk Score, Classic 08, or TU-08 at Transunion
However, while having a free access to a true FICO score is really awesome, the problem is that not too many lenders use it. Most are still happy with the old scores because, um, they work well. So even though your TU-08 score is in general more gentle to the consumer, don’t jump up and down when you are getting a high 800+ score from Barclay. The difference between that one and my Experian score, for example, was whopping 48 points last time I checked (804 vs. 756).
Photo By: Simon Cunningham
And now, the new FICO score model is about to make a splash.