by Dana Coyle

Created on: January 20, 2009

In today's society and economy, your credit score is more important than ever as we are increasingly judged on our credit rating. Knowing what your own score is BEFORE going to the loan officer can save you time and frustration.

NOT ALL CREDIT SCORES ARE EQUAL

In the United States, the FICO score is used by the majority of lending institutions. The FICO formula was created in the 1950s by the Fair Isaacs Corporation and ranges from 300 to 850. The higher the score, the more financial options a consumer can generally qualify for.

There are many other scoring formulas available, including the ones created by the three major credit bureaus to compete with the FICO formula. However, they are NOT the same.

People often monitor their credit to check for errors with their free credit reports from www.annualcreditreport.com that they are entitled to under the Fair Credit Reporting Act (FCRA). The FCRA allows the credit bureaus to charge for a credit score and scores are offered to consumers as they are getting their free report. These are usually NOT a true FICO score.

DIFFERENT TYPES OF FICO SCORES

FICO has specific formulas for different industries: mortgage, auto and consumer credit (credit cards). They have slight variations in the calculations but are all FICO scores. The mortgage version is the one most often available to consumers.

Each credit bureau also has its own FICO version. Equifax has the Beacon, Beacon 5.0, Beacon 96, and Pinnacle scores. TransUnion has the Empirica, Empirica Auto 95, Precision Score, and Precision 03. The Fair Isaac Risk Score, FICO and FICO II are generated by Experian.

WHERE TO GET YOUR FICO SCORE

The Fair Isaacs website, www.myfico.com, offers all three FICO scores with the three credit reports for under $50 in the "Credit Complete Package". Periodic discounts are available, bringing the cost down to under $40.

Some credit card companies and banks offer their customers access to FICO scores. Check with your lender or bank to see if they offer this free, beneficial service.

CREDIT SCORES THAT ARE NOT FICO

These consumer credit scores are not actual FICO scores:

Vantage Score

NextGen

CE Community Empower

Credit Expert

National Risk Score

Plus Score

Credit Secure from American Express

Remember, checking your own credit and scores does NOT count against you. With the availability and easy access to your scores, it makes sense to be prepared and get credit-wise to give yourself every financial advantage possible.

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