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. Still, there's another credit score term that's been thrown around - FAKO score. What are all these different scores and what do they mean? Which one is the "right" one?
Credit Score is Generic
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.
There are a few companies that sell credit scores. Each of the three major credit bureaus has its own version of the credit score. Equifax has PLUS, Experian has BEACON, TransUnion has EMPIRICA.
You may have also heard about the Vantage Score, a newer score developed by the three major credit bureaus, that also considers non-traditional forms of debt like apartment leases and utility payments.
FICO is a Brand
The FICO score is a branded credit score, developed and administered by a company called Fair Isaac.
For the analogical-minded - credit score is to FICO as bandage is to Band-Aid.
What about FAKO?
FAKO score is used to refer 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.
What's the Difference?
As far as we know, all the credit scores are generally calculated the same. 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 (some won't).
Which Should I Care About?
There're just 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.
If you're going to apply for a loan, it won't hurt to purchase the other three bureaus' credit scores to gauge where you stand overall.
