FICO scores can be confusing to say the least. In reality a person has many different FICO (Fair Isaac Company) scores depending on what they are applying for and the codes that are being used to pull the credit report. What about when we pull our own credit report? Are we getting real FICO scores? And what ever happened to FICO 09?
Whether or not you are getting a true FICO score depends on where it’s coming from. You can order a FICO score from www.myfico.com or from each of the three credit bureaus: Experian, Trans Union and Equifax. However these are personal FICO scores and not industry driven. This basically means that they will always be higher than any industry driven score such as a mortgage or auto FICO score and are for educational purposes only.
Some credit cards and other websites offer a credit score to consumers, but these are not FICO scores and are commonly referred to as FAKO scores. A more valid term for these credit scores, as would be with any credit score a consumer orders on their own, is just simply ‘educational scores.’ They may be close to an actual FICO score but they are not generated by Fair Isaac. These scores are considered personal scores and not used by any industry in making credit decisions.
If a consumer really wants to see their mortgage FICO scores they have to go through a licensed mortgage broker or bank. They have mortgage “codes” that are set up when credit is pulled in order to generate an actual mortgage FICO score.
That brings us to the question – what happened to FICO 09? It’s still there but unfortunately is not an option when it comes to most lending situations. Fannie Mae and Freddie Mac which are used for the majority of mortgages do not allow the use of FICO 09.
The biggest advantage to FICO 09 is that paid collections (medical or otherwise) are not factored into the scoring model. Unpaid medical collections also have less of an impact on FICO 09 scores. This is potentially huge for a lot of consumers! Unfortunately, as of now, the majority of consumers will not be able to benefit from this.
In the last year there has been a lot of push from legislators and the CFPB for Fannie and Freddie to look at adopting different scoring models than what is currently being used. Recently a bill was introduced into the U.S Senate that could have an impact. There is a lot of bipartisan support growing for the “Credit Score Competitive Act” H.R. 898.If passed this would require Fannie and Freddie to adopt the use of other scoring models such as FICO 09 and the Vantage Score. Both of which could open the doors for a lot of consumers who do not now qualify for a mortgage.
There will always be at least some confusion around FICO scores, which ones are used and why. The important thing is to get educated on the differences and possible changes that may be coming in the future. We can overcome at least some of the confusion surrounding these scores with knowledge.