Understanding Credit Scores

The One That Matters

The only credit score that matters in the world of credit repair is the FICO score. Lenders make their lending decisions based on FICO scores, which they purchase from the credit bureaus. Oddly enough these are not the same scores that the credit bureaus sell to consumers. Here is a quick overview of the tangled world of credit scores.

The Bureaus, FICO, Lenders, and You

The credit bureaus maintain the consumer data used to calculate credit scores. Fair Isaac owns the FICO scoring model and licenses its use to the credit bureaus. The credit bureaus apply the scoring model to consumer data and sell the resulting FICO scores to lenders. But the credit bureaus, with the exception of Equifax, do not sell FICO scores to consumers. Instead, they have created their own proprietary scores which they sell to consumers.

The Problem with Bureau Scores

Experian calls their score the “Plus Score”, and TransUnion calls theirs the “TrueCredit” score. These bureau scores unfortunately have very little correlation to real FICO scores, often differing by as much as 100 points. Hence, these scores are of little use in tracking your credit repair progress. Worse yet they can be a terrible disappointment to consumers who make a loan application after purchasing a bureau score only to discover that their FICO scores are considerably lower.