Save Money on Credit Scores!
Credit scores are on sale. And these are actual FICO scores. When you want to check your own credit scores, there are many options. The majority of lenders in the United States and Canada use some version of the FICO score, which is owned by Fair Isaacs Corporation.
The FICO score was developed in the 1950s as a tool for financial institutions to have a consistent, reliable method of evaluating the credit risk of an individual applying for a loan. Personal information such as nationality, race, gender, religion and marital status, was taken out of the equation to make the scoring formula a more accurate reflection of someone’s credit worthiness based solely on their financial history.
Today credit scores are utilized in many aspects of finance, not just for obtaining a loan. Insurance rates can be determined by credit factors; banks often check credit before opening accounts with new customers; utility and cell phone companies typically pull an applicant’s credit for review; renting an apartment usually means a credit check; and employers even check credit, especially if a position has a security clearance.
However, the consumer credit scores that are heavily advertised by the credit bureaus are not necessarily FICO scores. This means that someone who does their homework and checks their credit before going to apply for a loan thinking they have a 700 score, may be surprised to find that their lender is using a much lower score to evaluate their loan application with. One likely reason is that the consumer went in with something other than a FICO score so the comparison is not fair; it is not apples to apples, so to speak.
When the Fair and Accurate Credit Transactions Act (FACTA) was passed in 2003 as an amendment to the Fair Credit Reporting Act (FCRA) it gave consumers the right to see their credit reports at no cost. However, the credit bureaus maintained the right to charge for credit scores when a consumer got their credit report.
There were probably some fees for them to pay when they used the FICO formula to give the credit score to the consumers. In 2005, the three major credit bureaus, Experian, Equifax and TransUnion, developed the Vantage Score, which was launched in March of 2006. It was promoted as a consistent model to be used across the three credit bureaus making it easier for consumers to understand.
It also did not require the credit bureaus to pay a fee to Fair Isaacs when they generated a score for someone, creating a new revenue stream for these major corporations. Coincidentally, the number of television advertisements for credit reports and scores has increased over the past few years.
Although the alternative scores are very prominent in the media, most companies still use FICO scores for lending decisions. So even though many people are checking their credit and getting their scores, it does not mean they are seeing the same numbers that their lender is looking at.
Now for more about the sale. Everyone can get their FICO scores at www.myfico.com. Under the Products tab, the “FICO Credit Complete” is all three credit reports and scores. And for the entire month of April, myfico is offering 25% off all of their products. The discount code is 7yrsale. This brings the price to under $36 for all three actual FICO scores with the three credit bureau reports from Experian, Equifax and TransUnion.
Anyone who is considering a major purchase in the next year such as a home or auto loan or a mortgage refinance, should take advantage of this offer so to have a clear picture of where his or her credit rating is right now. They can also talk to their lender in the pre-application process to find out the specific requirements and be sure that their credit is optimal before they do the official application.
One final note, checking your own credit does NOT count against your credit scores. It will show up on your credit report as a Soft Inquiry, but is not figured in the scoring formula. However, when a lender pulls or checks your credit for a loan application, it is considered a Hard Inquiry and can have a negative impact on credit scores.