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FICO & FAKO Credit Scores

Understanding the Different Credit Scores

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The lingo used to talk about credit scores can be confusing. On any given personal finance website or in any given book, you might see the term credit score. Or you might see FICO score. Then, there's the newer VantageScore. Still, there's another credit score term that's been thrown around in online forums - FAKO score. What are all these different scores and what do they mean? Which one is the "right" one?

Credit Score is a Generic Term

Let's start at the beginning. Think of "credit score" as a generic term that used to refer to the numeric value given to your credit history. Your credit score is calculated using information contained in your credit report and indicates whether you have a bad (low credit score) or good (high credit score) credit history.

There are a several companies that sell credit scores and each of the three major credit bureaus has its own version of the credit score. Plus, the major credit bureaus collaborated and came up with their own brand of credit score, the Vantage Score.

FICO is a Brand of Credit Score

The FICO score is arguably the most well-known credit score. It's a branded credit score, developed and administered by a company called FICO, formerly Fair Isaac. For the analogical-minded - credit score is to FICO as bandage is to Band-Aid. To make matters slightly more confusing: when people say credit score, they're often referring to the FICO score, but they may also be referring to any number of credit scores out there.

What about FAKO?

FAKO score is a term that refers to any credit score that's not a FICO score. If you purchased your credit score from anywhere but MyFICO.com, then it's a FAKO score. These FAKO scores are for educational purposes only and don't necessarily reflect the scores that lenders really use to approve your applications. Even a FICO score purchased online may not be identical to the one your lender uses because there are also many versions of the FICO score, versions for various industries, and previous versions introduced years ago.

What's the Difference?

As far as we know, all the credit scores are generally calculated the same, except for the VantageScorewhich gives different weights to credit report information. Since we can't see each company's exact formula, it's hard to pinpoint the specific differences.

Creditors and lenders use the credit score from the company they have a business relationship with. It could be a credit bureau's credit score, the FICO score, or the lender's own credit score. The only way to find out is to have your lender tell you. Starting in 2011, every lender who either denies your application or approves you for less favorable terms is required to send a free copy of your credit score, if your credit score is the reason for that decision.

Which Should I Care About?

There are far too many different credit scores out there for you try to improve all of them individually. If you're working on improving your credit, use the FICO score as your basis. If you focus on bringing up your FICO scores, the other "FAKO" scores will come up as well. Note that you can only purchase your FICO score based on your Equifax and TransUnion credit report data. Experian no longer allows FICO to sell consumer credit scores based on Experian's credit report information.

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