Credit Scores

I would like to clarify the difference between credit scores and the different scoring models that are available to consumers.  As we all know by now, the three major credit reporting agencies are Trans Union, Experian, and Equifax.  What a lot of people don't know is how there credit scores are calculated and who is actually doing the calculating. 

First off, let me define what a credit score is.  The credit score is a statistical calculation of a consumer going 90 days or more delinquent on a loan obligation within a 24 month period-that's it... 

Now, let me answer the question:  "Why are my credit scores different?"  There are many credit scoring models available on the market today.  Each one uses a different formula to calculate your score.  Fair Isaac (FICO) is the company that MOST creditors will use.  FICO has no affiliation with Trans Union, Experian, or Equifax.  Lenders will, for a fee, use the FICO scoring model to calculate scores based on the information that is being reported to the credit reporting agencies.  The main reason credit scores are different from one another is that not all creditors will report to all credit reporting agencies.  Therefore, different information is being fed into the scoring model and coming up with different results.

The other reason that credit scores are different is because there are a number of different credit scoring models available.  Besides FICO, each of the credit reporting agencies has their own scoring model available.  I will consider these nothing more than score indicators because these are not the scores that lenders will use.  Don't be confused when you go online and purchase your credit score for $7.95-this is NOT your FICO score.  There is also a company by the name of Vantage Score that was developed as competition to FICO.  It uses a different scoring range and credit scores are generally higher using this scoring model.  Besides getting a credit report with credit scores from a bank, credit union, or mortgage lender, the only place you can get your true FICO scores is at www.myfico.com.