Your credit score is a numerical gauge of your ability to payback loans. Anytime you want to borrow money or get credit, the lender will look up this score to determine the risk involved in lending to you. The higher the score the better, so if you get a credit report and see a high score that means your credit is good, right?

Not necessarily so. The fact is there are several different credit scoring methods. Credit scores calculated from the same credit reports can differ substantially from credit scoring method to credit scoring method. So how can you ever know what your credit score really is? Well, luckily, 75% percent of lenders use FICO scores exclusively and you can purchase FICO scores yourself–you just have to know where to go.

FICO credit scoring was developed by Fair Isaac and Company as a numerical method of determining your credit worthiness. The scores range between 300 and 850 and are basically based on your past bill paying performance.

It would be easy if everyone used this scoring system, but the three major credit bureaus each have their own version of the FICO score: Equifax uses the Beacon system, TransUnion uses the Empirica system, and Experian uses the Experian/Fair Isaac system.

Althought they all use slightly different systems, all systems are based on the original FICO scoring method so generally your score should be equivalent from each. Of course, some lenders may also use their own scoring methods as well.

There is only one place where you can get your FICO score from all three bureaus and that is at http://www.myfico.com. If you order your credit score from anywhere else, again be aware that these scores are “FAKOs” (or “fake”) and can differ considerably from your FICO credit scores.

Adding to the confusion is the credit bureaus themselves. Recently, Experian revealed that the national average credit score of its consumers is 678. This is very misleading to the average consumer. When you buy your credit report and score directly from Experians website, you are getting what they call the “PLUS Score,” which is NOT a FICO score, and is NOT used by lenders anywhere. (Equifax is the exception–you can buy your FICO score directly from them at their website; however, the only place to get all three scores together is at http://www.myfico.com.) The 678 PLUS Score reported by Experian is actually the average of consumers’ PLUS Scores, not their FICO Scores.

Clearly, the PLUS Score (and all Non-FICO scores) are useless. Not only that, but such hype misleads consumers into purchasing their PLUS Score thinking that they are getting the same credit score that their lender will use. Non-FICO scores are worthless not matter what the credit bureaus or any website selling non-FICO scores claim. Even a few points difference in your credit score can mean confronting the reality of the loss of thousands of dollars out of your pocket–a loss that you probably didn’t plan for. The next time you want the most accurate credit score available, do yourself a favor and get the industry standard: the FICO credit score.

Consumers need to know that as of February 14, 2009, Experian based FICO scores and reports, previously available at myfico.com, are no longer available to consumers. As Barry writes at myfico.com, “The change will be effective on February 14th, 2009. While Experian’s decision eliminates the consumers’ ability to see their own FICO? scores, it will not impact your (lenders) ability to use FICO? scores in your lending decisions.”

Experts agree that FICO? scores are the most widely used measure of consumer creditworthiness used by lenders in the Unites States. FICO? scores are credit scores computed by Fair Isaac Corporation using the company’s proprietary computational formulas. Fair Isaac Corporation uses the credit information that Experian, Transunion and Equifax compiles about each consumer and runs this information through their complex formulas to arrive at three FICO? scores – one score per credit report.

Why is Experian’s decision important to consumers? Those individuals interested in augmenting their credit scores, repairing their credit, or understanding how lenders are making credit decisions about them, now have one less reliable avenue through which to try to assess their credit position prior to borrowing. If knowledge is power, consumers now have even less power to understand their credit score and if need be, understand that they need to fix bad credit scores.

Before any appreciation can be gained about what this change means in terms of consumer rights, it is important to understand the limitations that already exist on a consumer’s ability to accurately assess their credit score. The three major credit reporting agencies – Experian, Equifax, and Transunion – each gather information about a consumer and compile that information into a credit report. A consumer recently gained the right to an annual, free copy of these 3 reports. However, each of these CRAs use their own credit scoring models, different from the model used by Fair Isaac Corporation.

For this reason, consumers who wish to know what their FICO? scores are must request, and pay for, 3 FICO? scores from myfico.com. The reason for this is that each CRA compiles their own, and often different, credit information on a consumer. Each FICO score is based on one of the three CRA reports, and the three FICO? scores can differ by very significant numbers.

Many consumers incorrectly assume that the FICO? scores they retrieve from myfico.com are the same ones that lenders see prior to assessing their creditworthiness and therefore, the price they will pay for that credit. As of February 14, this is not necessarily the case. Not only will consumers not know what score (if any) is being provided based on Experian credit data, they will not know if a lender is basing a decision on one, two or three scores.

As Smartmoney magazine reports, Experian spokeswoman Sue Henson describes Experian’s relationship with Fair Isaac Corp. as “not strategic” and refers to the scores consumers access at myfico.com as “educational”. She further points out: “They are not necessarily by any means the scores lenders are using.”

What scores are lenders using? Good question. What scores and/or credit reports should consumers focus on if they want to heighten credit scores or repair credit? Good question.

The reality is that although a consumer can access their credit reports from the CRAs once annually for free, the scores contained on each of those reports are not FICO? scores. They are the scores computed using the 3 CRAs different scoring methods. Only the scores provided by Fair Isaac Corporation are real, genuine FICO? scores. Consumers must pay Fair Isaac Corporation to access their 3 FICO? scores – scores that are based on the information contained in the three reports, but that can differ significantly.

What is a consumer to do?

Many consumer advocates are now suggesting that consumers looking to access credit in any form ask the lenders to tell them what score and information they are basing their decisions on. If a lender finds this request too challenging, tell that lender that you will not do business with them for these very reasons and go elsewhere.

Outside of that, the best a consumer can do is to request their free annual Experian credit report (along with the other two – Transunion and Equifax). Study the report to ensure that all information being reported is accurate and up to date. If it is not, begin the steps involved to see that it is corrected. This is the best a consumer can do to attempt to ensure that their FICO? scores accurately reflect their credit worthiness. There is still no guarantee, even if you pay for the 2 FICO? scores you can still access, that the scores you see are the same scores your lenders will see.

Although every Credit Reporting Bureau compiles information about each consumer and provides a credit score based on their own scoring model, and Fair Isaac Corporation compiles FICO? scores using this data and their own credit scoring system, learning as much as possible about how Fair Isaac Corporation weighs general categories of consumer behavior can provide a general guide to how consumers should approach building good credit scores.

So Many Scores so Little Time

There are lots of different credit scores offered on the web. If you are starting a credit repair program you may want to benchmark your scores. So you are likely to go online, pick out a website and pay the price. Unfortunately, the odds are that the scores you purchase will have no resemblance to the scores a lender will use to underwrite a loan.

The Real Scores

There is only one website where you can purchase the same scores lenders use; this is MyFico.com, the website for Fair Isaac Corp the developer of the FICO scoring model. As a credit repair consultant it is a matter of daily consternation to me that the same bureaus that sell these important FICO scores directly to lenders will not sell FICO scores to consumers.

The Wrong Scores

You can purchase credit scores from Experian, Equifax, and TransUnion, but they are not FICO scores, and therefore of no real credit repair value. These credit bureau scores are of their own creation and exist solely for the purpose of cashing in on the ignorance of consumers. I cannot imagine any scenario where there would be no moral culpability on the part of the bureaus.

No Practical Application

I have heard it said that although these bureau scores are not the same as FICO scores they are a way for consumers to track changes in their reports. This is not so. The bureau scores just don’t behave the same way. In other words, changes in your credit affect your FICO scores differently that they do the bureau scores. These bureau scores have no practical application, for credit repair or otherwise.

The Equifax Exception

For the record, Equifax offers the only credit repair friendly credit score. In fact, they do offer a FICO score. They currently use a previous generation of the software, and they only apply it to their own data, but it will generate a close approximation of your real score and generally behaves the same and could be used to monitor credit repair progress.

Measuring Credit Repair Progress

Unfortunately, this one bureau nod to integrity does not provide an optimal credit repair solution. You should know that many lenders, and all mortgage lenders, purchase all three FICO scores and use the middle of the three scores. An accurate measure of your credit repair status requires all three scores

Ask Your Lender for Your Reports

Given that lenders are able to purchase FICO score from the credit bureaus, you may have a roundabout way of getting your hands on a real tri-merged report with all three FICO scores. If you recently applied for a mortgage you may consider contacting your lender and asking for a copy of your report. Tri-merged mortgage credit reports are usually quite detailed and ideal for credit repair purposes.

Bend the Rules Just a Bit

By the book, lenders are not supposed to provide copies of reports directly to consumers. This is standard boiler plate language included in lender agreements with their report provider. The Fair Credit Reporting Act includes an information sharing clause; in the case of credit denial consumers are entitled to a copy of their reports, but this is a hassle compared with calling your lender and asking for the small favor.

Credit Repair and Your Reports

If you want your scores to establish a starting point for your credit repair effort I should say a bit more. If you go to MyFico.com to purchase your scores they will come complete with your three reports. Unfortunately, as if happens, even though Fair Isaac is the only source for your scores, they do a terrible job on the credit reports.

Fair Isaac Report Problems

MyFico.com credit reports are edited to the point of being useless for credit repair purposes. This is especially true if you intend to investigate all the information that should be available on your reports. Fair Isaac reports are highly sterilized, and in many cases actually exclude your account numbers, which you may need for your credit repair effort. So, for credit repair purposes you should get your reports from the credit bureaus. Phew!

Making Do

If it all seems crazy and unfair remember that the bureaus have the credit data, and Fair Isaac owns the credit scoring software. Everyone wants to make money and until they figure out a better way to work together we just have to make do as best as we can. Good luck!

Every citizen is legally able to get a copy of his or her credit report annually for free from the three major credit consumer reporting companies: Equifax, Experian, and TransUnion. There are some places on the Internet that will provide you with the three credit reports and a credit score from each of the reporting agencies.

Each of the reporting agencies, Equifax, Experian, and TransUnion has their own scoring system. If you get a score with your reports you will most likely get three different scores. Here are two questions you may have: Are the credit reporting agencies scores the same as my FICO score? No. How do I check my FICO score for free? That is more difficult to answer.

A FICO score is derived from a third party company, Fair Isaac Corporation, and it is the best known and most widely used credit score model in the United States. The FICO score is different than the credit reporting agencies scores as Fair Isaac uses their own statistical model to derive their scores. You actually have three FICO scores, one for each individual credit company Equifax, Experian, and TransUnion.

In addition to having three FICO scores, one for each individual credit company, you also have different FICO scores based on three types of credit: 1) mortgages, 2) automobile loans and 3) consumer credit. These scores reflect the different lending default risks inherent to these different types of loans.

Now, getting back to the question of how do I check my FICO score for free. As you now know, there are actually three FICO scores that you would need to obtain to have an exact knowledge of what your FICO scores are for each reporting agency. You can check your FICO score for free if you go to the website myfico.com and enroll in some of their programs that track your credit score and protect you from any type of malfeasance to your credit reports. However, enrolling in these programs will cost you a monthly fee.

The straight up answer to “How do I check my FICO score for free?” is that there is no free way to get this information. If you simple want to get your FICO scores alone you can go to myfico.com and purchase one or all three of your reports for a nominal fee. However, if you want to purchase some type of credit protection service you can get your FICO scores for free as a bonus.

A credit repair letter is simple to write, and yet in this simplicity is quite a bit of leverage. If you have proof of an error that you find in your credit report, the ball is in your court. All you must do now is craft a letter that will let the credit bureau know that there is a mistake in your files, and that you would like it corrected.

Don’t make your letter look or sound too “professional”. You want the credit bureau to realize that an individual wrote this letter, and that it was not a computer generated letter such as one that might be supplied by a credit repair agency. You just want to give them the correct impression that you are a consumer who is quite peeved to find errors in a set of documents which, by law, are supposed to be error free. Its fine not to sound too “prim and proper”, if that’s your style.

Make sure to include all of your identifying information in the letter, such as:

Full name and address Telephone number(s) Social Security number Account number and name of the credit card/loan that has erroneous information listed. A copy (not the original!) of any paperwork you have that will substantiate your claim.
Where Do I Send These Letters?

You should send a copy of your letter to all three credit bureaus. For example, let’s say that the error was on a credit report sent to you by TransUnion. You should also get in touch with Experian and Equifax. Often, these three bureaus do not share information with each other, but cover your bases just in case the error has made its way into the files of all three.

Use Registered or Certified mail to send your letters. This way you have proof of the date of mailing, important if you don’t hear back from anyone in the 45 day time frame.

The way you word your letter is totally up to you, but basically, you need to impress upon the credit bureaus that a mistake has been made, and you have the proof. Once the letters have been receives, the credit bureaus will set to work with lightening speed, as it’s the law that all claims of error must be looked into. The credit card or loan company that you supposedly skipped a payment to, did not pay off in full, or whatever the error was, will be contacted and asked to prove the claim against you. Since you have your proof in hand, this is impossible.

Credit bureaus have up to 45 days to get in touch with you and let you know whether or not the errors have been removed from your file. Most will get right on it, and you will soon receive a letter in the mail letting you know that all is well again.

Credit Repair and your Credit Reports

Credit repair is all about knowledge, and your credit reports are the key. There are three credit bureaus, Experian, Equifax, and TransUnion, and they each provide their reports in a different format. In addition, there are many tri-merged reports available which blend the information from all three credit bureaus in a different format. The tri-merged reports are designed to be user friendly and may be your best bet for credit repair.

The Real Score

There is another credit repair resource that gets less notice, but is arguably the most important. This resource is MyFico.com the website for Fair Isaac Corporation the creator and owner of the Fico credit score. The credit bureaus sell their own scores, marketing them with no visible disclosure that they are not the scores that lenders use. These bogus scores are deceptive and bear little resemblance to the genuine scores available at MyFico.com.

The Right Credit Repair Set Up

So, if you want to benchmark your scores, get the scores that count. Ah, but there is a twist. Although you should get your scores from Fair Isaac, their credit reports are the least useful for credit repair. So, I’m sorry to say, but if you really want to do it right buy your scores from Fair Isaac and a good tri-merged report for credit repair information purposes.

Proof Reading for Credit Repair

Once you have your credit reports it’s time to put on your reading glasses and get down to the business of squinting through all of the data that the credit bureaus attribute, often wrongly, to your life. I suggest that you clear your desk or kitchen table, get a pad of paper and a highlighter and make a note of everything you see that is even vaguely questionable. Here are some of the most significant things to look for.

Pushing it to the Limit

Credit card issuers often under report your high credit limits. This seems innocent enough; most people don’t think to look for this innocuous little tidbit, but it has the potential to knock 100 points off your score. Gasp. Check it out. The FICO scoring model places great weight on the relationship between your balance and your limit. If the credit card issuer erroneously underreports your limit your score may be artificially depressed.

Gone but not Gone

Another problem often overlooked are accounts that have been closed and paid but continue to report as open with balances. This is very common and can overstate your current debt load. It is not unusual to spot two or three of these accounts, ranging from mortgages to little store cards. You can easily eliminate these obsolete accounts for a nice little credit repair boost.

Ditching the Dupes

Duplicate accounts are as common as dandelions in the spring, and like old closed accounts that report as open, these bothersome little pests can put a dent in your scores. These accounts appear for a variety of reasons usually stemming from creditors reporting methods and occasional account number changes. Look carefully for these redundant accounts and remove them.

Collections are Iffy

Collections are the most questionable accounts on your credit report. Collectors buy, sell, and even trade debt regularly. Collectors that do not own a collection account, per FTC Fair Credit Reporting Act Staff Opinion Letters, must cease reporting that account. Unfortunately there are no incentives for them to do so, and hence these old erroneous collections can linger forever. Challenge them as part of your credit repair effort.

The Student Loan Solution

If you have student loans that have slipped into default it is time to make peace with your lender. Student loans are different from every other debt. There is no statute of limitation for collection of student loans and hence there is no hope of waiting until they go away. In fact, the situation will get worse with every day you delay. The good news is that you have awesome legal rights when it comes to your student loans including easy rehabilitation and consolidation programs. Call the Student Loan Ombudsman at (877) 557-2575. They are on your side.

Credit Repair Lifeline

Is this too much to handle? If you are too busy to manage your own credit repair project, hire a credit repair professional. This is far too important to ignore. You can’t afford to delay your credit repair project. Every single point on your credit score has an impact on your life, so take care of your credit and your credit will take care of you. Good luck!

Copyright ? 2008 James W. Kemish. All Content. All Rights Reserved.