#credit report companies
Your FICO score isn’t what car dealers, mortgage lenders, and others use
Fair Isaac, the company that invented FICO credit scores in 1958, derides its competitors as “FAKO” imitators because their scores aren’t the ones used by lenders in their credit-making decisions.
But the FICO scores that millions of consumers buy each year for $20 a pop are also not the scores that car dealers, auto-finance companies, mortgage lenders, and others use. Moreover, after reviewing material that Fair Isaac provides only to lenders, we think the scores consumers can buy are inferior.
FICO or FAKO?
How to protect yourself in the credit-score shell game
1. Demand to see the actual proprietary score used before you agree to a loan or an insurance policy. You have the most leverage to get the truth before the deal is sealed.
2. We see no point in buying any consumer credit scores, given that they’re not the same ones used by lenders. But if you do, and a lender or insurer later tells you your real score is lower or higher, do what you’d do with any product that doesn’t deliver: Demand a refund.
3. Always shop for credit at multiple lending sources to find the best rate. Even if lenders won’t divulge their secret scores, getting rate quotes from several will reveal the best deal based on the numerous—and probably different—scoring systems used by prospective creditors.
4. Be sure to get your free annual credit report from each of the big three credit bureaus so you can look for and dispute errors. (Go to AnnualCreditReport.com.) We recommend that you stagger your requests and get one report from a different bureau every four months.