FICO & Credit score... Same thing?
Answers:
I have only a few things to add to clarify a few things.
The important thing to understand these numbers will not always match the ones lenders come up with. Why? Each has their own formula that may weight things differently..hence..they could come up with a different score.
If I pull a score from Equifax or MyFICO...this score is the "offical" Fair-Issac FICO score. If I pull a 3in1 score like what I have through Trans union..it's not offical..just a estimate.
The bottom line is this: It really does not matter. Three different lenders can pull the same exact report and come up with three different scores..sometimes 100 points apart.
THERE ARE 3 MAIN SCORING COMPANIES. THE NAME OF ONE OF THE SYSTEMS IS FICO. THAT IS THE BEST KNOWN NAME AND IS COMMONLY USED AS A GENERAL TERM, BUT IT IS REALLY SPECIFIC.
THE REASON 3 SYSTEMS ARE USED SEEMS TO ME TO BE THAT THERE ARE SO MANY ERRORS THAT THE LENDERS WANT TO BE SURE THEY DON'T MISS ANYTHING. THEY TYPICALLY USE THE MIDDLE OF THE 3 SCORES FOR MORTGAGE PURPOSES.
MORTGAGE BROKER
it's the same. FICO,
BEACON = Equifax
Classic = Trans Union
Fair Isaac = Experian
As early as 1994, those in the mortgage industry became aware of 'scoring models.' These scoring models were result of the development of automated underwriting systems. The first to come up with this automated scoring system was a company called the Fair-Isaacs Company (FICO). The idea behind the scoring models was a good one. It was meant to streamline the lending process. But it's only been in the last few years that consumers have seen some relief in the vast amount of paperwork involved in obtaining a mortgage.
But why is the credit score so important? The answer is this; The lending industry has moved toward risk-based pricing. In lay terms, the lower your score, the higher your interest rate and the more paperwork you have to provide to prove that you are creditworthy. What is of particular interest is the incredible amount of money you save, over time, with a lower interest rate. You would be surprised to see how much less money you pay over the term of a 30-year note if your rate is 6% as opposed to 7% on a $100,000.00 loan. THAT'S why it's extremely important to achieve a high credit score before applying for a loan.
I just finished the new book entitled Women & Money by Suze Orman. Since you seem to be like me and probably barely know enough about credit scores, saving money, stocks, to get by, I will tell you to get that book and it will explain credit scores/FICO. Very good book, very simple language to understand. I recommend her books to every women wanting to understand finances better.
FICO is the same as your credit score.
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