FAKO versus FICO Credit Scores: Do You Know the Difference?

Interestingly enough there is much talk these days surrounding FICO scores and how to increase them or keep them “healthy”. However, many don’t understand this number that has many in a panic. Here’s a brief explanation:

A FAKO score is the actual industry name for the “credit” score reported by most FREE credit score companies. This score cannot be correlated to the “true” FICO score. One score can increase and the other decrease for the exact same event/reason. A FAKO score range differs from FICO. For example, free credit score agencies “range” vary, usually in the range of 501-990 vs. FICO’s range of 300-850. As shown, there can be large differences in the scores.

MyFICO.com and a very short list of other companies offer a “TRUE” Classic version of FICO scores. MyFICO.com offers a Classic EQ FICO called Beacon 5.0, of which the majority of lenders use this score, not the “free” credit scores to determine credit worthiness. And many times the free scores are higher than your true FICO. So when you go to apply for credit you may not be approved because the free score has given a number the lenders don’t use. Lenders determine credit worthiness, interest rates and also many insurance companies use FICO scores to determine premium amounts.

If you want your true score, take the leap and consider investing in a My FICO (MyFICO.com) report once a year. Here are a few tips for increasing or maintain a credit worthy Credit/Fico Score. The factors listed, as well as other formulas are used to determine credit scores:

• The amount of open credit (do not just close lines of credit, be strategic)

• The kinds of open credit affect scores (be strategic in applying for new credit)

• Delinquent accounts (get past due accounts current)

• Payment History (pay regularly and on time) This is a large portion of one’s score

• The length of your credit history is used in the determination (open new lines of credit sparingly, especially if you have a new credit history)

• Order reports from all three major reporting agencies, analyze them for errors such as old information, information that is not yours, and challenge in writing to have any discrepancies removed

• When analyzing credit reports, use the photo supplied as a guide and use your judgment as to how to strategically have your credit reflect as closely as possible the image

• Pay debt off (this is another area where a large portion of FICO scores are derived.)

Finally, don’t say yes to every department store for a credit card or loan this season and beyond. Getting a discount on that purchase is just not worth the amount and time it takes to repair the damage. Also, EACH INQUIRY for new credit, as well as open/new credit is figured into the formula and will lower your score.

I invite you to get started on the above, check out your credit situation and be proactive in your financial future. Hey, and feel free to join the conversation. As always, here’s to your financial success!

 

Want to use this article for your Ezine, blog or newsletter? Feel free, but you must keep the article intact including this statement and credit.  Nisha Jackson, is the “The Wealth Breakthrough Catalyst” a sought after Business  & Money Coach, Speaker and Author helping entrepreneurs create wildly successful businesses by maximizing business revenue. As well, she shows women how to effectively manage their personal finances. While earning more and working less so they can live the freedom based lifestyle they deserve. Sign up for information and The Brilliance Newsletter @ www.financiallybrilliantwomen.com or email info@financiallybrilliantwomen.com for more information.

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One Response to FAKO versus FICO Credit Scores: Do You Know the Difference?
  1. I had no idea that there was such thing as a FAKO score. This is such important information! Thank you for sharing – I’m passing the info on to others!