FICO SCORES AND YOU

Published on: 09.29.2015.


If you look closely you'll notice...

"View 19 FICO versions"

"Compare FICO 8"

What does all this mean?

Most people think that there is 1 credit score…..Let me clear up some of the confusion….

FICO has a popular consumer score calculated by each of the three credit reporting agencies.

For simplicity, let's call it the FICO original score.

However, different types of lenders use a modified version of the original score.

Auto lenders only really care how you've paid your previous auto loans so FICO modified their original score for their purpose. That is called an AutoScore. If you paid your previous auto loans as agreed you will have a higher score and that's what auto lenders want to see.Credit card lenders are primarily concerned with how you've paid and managed your credit card accounts so they use their modified version of the original score as well.And although you see a score "commonly used in home lending" from FICO...it's kind of misleading. Home lenders have always used the FICO original score. It's the only lender I know of that uses an unmodified score.

 

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Which is why I recommend getting your scores from Myfico before applying for a home.In summary, all you really need to know is your FICO 8 scores.You have three FICO 8 scores.One from Equifax, TransUnion & Experian.But if you're in the market for a new car or credit card...the additional scores now provided by Myfico will give you a better idea where you stand with those lenders.

Now we’ll talk about Auto Loan scores!

 

I tell my clients that after a bankruptcy... as funny as it may seem…. Scores don’t matter that much! ( SAY WHAT?)

At least for six months a year after, because the lenders are looking at your ability to pay and stability to pay. Also I have had people bring in their credit scores to the dealership and think I can use the score…. “ I can’t! Scores for an auto loan are not only different than the ones you get online, they also use different Credit bureaus in different parts of the country! Seattle ( Pacific NW states) uses Equifax primarily and California uses Experian and East Coast often uses TransUnion…. And so on and so forth.As unfair as it may seem, you may have a 580 score after a BK and another person has a 0 score or a 480 score and they get the same or lower rate as you! THat is because like I explained, scores don't mean as much just after filing or discharge.

So don’t worry so much about the scores. After you start to reestablish, and YES, you need to reestablish, then your score will start to come into play.In future blogs and emails, I'll explain how the FICO scores work with a home or credit cards and how to use them to your advantage!

 

 


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