This is one of the most basic questions that have been posed to consumers usually when they are subscribing to loan or credit card services. The answer to this question is that the two scores of FICO and Equifax are first computed by the lenders while rendering the loans. Still, FICO scores are reported to be more popular than Equifax scores in terms of lending.
Another such term is FICO score which is an abbreviated form of the ‘Fair Isaac Corporation’ and it pertains to a credit score system offering firm.
The scores are popularly referred to as FICO scores that originate from the Fair Isaac Corporation Fico’s full name is Fair Isaac Corporation scores. The credit scores or the ‘’FICO’’ scores range from 300 to 850 where the higher number is preferable. The credit scores that are popularly referred to as the FICO score, have the following factors your credit report, your payment history, credit utilization rate, length of credit history, the kind of credit that was used, and recent credit that has been checked. FICO score is employed in more than 90 percent of the credit decisions made in the United States and is among the most recognized credit score systems. Equifax, Experian, and trans union are the three bureaus that have their way of calculating FICO scores according to the information that they have on the credit report.
What are the details about the Equifax credit score?
Equifax credit scores are also known as Equifax Credit Risk Scores, and the scale of this score is between 280 and 850. These scores are then determined by Equifax using information available in the consumer Equifax credit report. Equifax credit scores have the same parameters as FICO scores; your payment history, amount of credit used, credit history days, and types of credit. One notable difference is that FICO scores are not based on personal information such as income, job, education level, or physical location while Equifax scores may factor some, if not all, of the information above in addition to your credit report.
What makes FICO scores preferred among lenders?
While Equifax provides its credit scores, most lenders prefer to use your FICO scores when making lending decisions for several key reasons:
- Widespread Use - Credit score models such as the FICO scores are applied in more than 90% of the credit lending decisions made across the United States. First of all, FICO is without a doubt the most popular credit score model currently in use. The industry standard for scores is preferred over the unique score generated for each lender.
- Superiority - Using FICO scores, it has been seen that the model has a high predictive ability for the consumer with 90+ days of delinquency on credit obligations over two years. FICO scores have high predictive accuracy as is confirmed by statistically founded models that are created with the use of thousands of credit reports.
- Consistency – FICO is competent in the sense that it does not factor in personal information such as your job, income, or where you live, etc. This makes FICO consistent and accurately rated in terms of scoring irrespective of your status. Lenders can rely on FICO as it provides stability regarding their loans.
- Custom Scorecard Construction – FICO allows lenders to construct their scorecards unique to their risk and the type of loans that they offer. This, in turn, lets creditors to even more precisely target credit risk for their particular purposes. More specifically, Equifax does not presently sell customized scoring models.
Does Equifax credit score used by car lenders?
Even though FICO scores are much more commonly used, some lenders can use Equifax credit scores together with your FICO rates when coming up with lending decisions. Every lender has its requirements or policy when it comes to lending. This is where including Equifax scores can be beneficial to lenders since it can give them further credit data to use in assessing risks.
However, when the lending decision affects a group of people, maybe for mortgage lending, then the lenders are very likely to consider more than one score which includes Equifax and FICO scores. When the sum of money involved is this large, there is a need for the lenders to take time and look at risk from all angles before approving the applicants.
From the perspective of the consumer, what is most relevant?
The most important things for consumers to remember are:
- Banks and other credit-granting authorities will always consider your FICO scores each time you apply for credit of any form.
- You have several FICO scores generated by each of the credit bureaus; the score that is being considered may be one of the three or an average score.
- Being a member of three different credit bureaus makes your approval for credit facilities easier when you possess high FICO scores.
- FICO and Equifax scores are based on the information contained in your credit reports; maintaining accurate credit reports and removing unwanted data is very important.
Though lenders may prefer one scoring model, for instance, FICO, it lies in the consumer’s best interest to maintain all scores high to influence good credit management. Make some urgent payments, manage your credit balances well, and ensure that the information on your credit report is accurate and not lowering your scores. This will help to create the best climate for passing the test on the granting of loans and credit cards in the future. Check your scores and credit reports often so that they reflect the best scores for you.
Call now for expert credit repair services: (888) 803-7889
Read More:
Why is my Equifax score 100 points lower than TransUnion?
Which is more reliable Experian or Equifax?
What is going on with Equifax?
What are the dangers of Equifax?
Which is more credible TransUnion or Equifax?
