Two distinct but similar credit rating systems are called myFICO and FICO. Fair Isaac Corporation, the business creating the FICO credit rating system, is FICO for short Directly providing credit ratings and other services, myFICO is a consumer business of FICO.
Though both are from the same firm and myFICO also provides FICO scoring models used by lenders, the scores are not always the same. For certain loan choices, lenders use several FICO scoring systems. My FICO provides teaching scores to guide the customers rather than the real scores that lenders consider.
FICO Scoring Models
It is important to understand that FICO has created multiple distinct credit scoring systems, which lenders use to decide creditworthiness on applications. Among the most often utilized FICO ranges are: Among the most often utilized FICO ranges are:
Popular among lenders nowadays because of its capacity to provide more precise credit risk projections, FICO Score 8 is the most recent variation of FICO credit ratings. FICO Score 8 models of credit score lie between 300 and 850.
vehicle lenders especially utilize the FICO Auto Score to estimate a borrower's likelihood of repayment of a vehicle loan. The possible score is 250 to 900.
Designed for credit card issuers with scores ranging from 250 to 900, FICO Bankcard Score
Mortgage lenders use this risk assessment system designed especially for mortgage borrowing and ranges from 300 to 850.
These FICO scores are computed uniquely for every industry of lending and they use different credit report data that relates to that type of lending. This means a consumer can have several different FICO scores at one time depending on which model is used.
What is MyFico Credit Score?
myFICO is the consumer arm of FICO that deals in credit scores, education, and other services to the consumer. Consumers can get to know their 28 FICO Scores through myFICO, though these are only educational scores to showcase credit profiles.
The 28 FICO Scores offered by myFICO reflect auto lending, banking card lending, mortgage lending, and general lending models. However, the scores are not necessarily the actual scores that real lenders may use to approve or reject credit. Instead, they inform consumers about how lenders may consider their credit risk level based on the FICO models.
For instance, one may have a FICO Score of 8 out of 720, which is based on credit information from Equifax using myFICO. However, a credit card lender who uses the same Equifax report may arrive at a FICO Bankcard Score of 740 for credit decision-making.
Although the 28 FICO Scores from myFICO can give reasonable approximations of lending-specific scores, actual lender scores may vary slightly depending on the report used, the model version and date used to gather the score, and the criteria of the lending institution.
Main Differences Between myFICO and FICO Scores
There are some important differences between the educational credit scores provided by myFICO compared to FICO scores used by lenders: There are some important differences between the educational credit scores provided by myFICO compared to FICO scores used by lenders:
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myFICO scores are different from the lender FICO scores as myFICO scores are used for educating people about credit while the lender FICO scores determine loan eligibility.
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For one, different lenders may utilize different FICO score versions than what is available on myFICO.
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FICO scores can also differ for the same person based on different kinds of loans at the same time.
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Hence, the same person will have different FICO scores depending on the lender since credit reports and the scoring model versions may vary.
These educational myFICO scores provide the approximate credit score the actual lender FICO score may differ a little.
Should You Check Your myFICO Scores?
It is very useful to get a snapshot of your current state of your general credit health based on your latest 28 FICO Scores on myFICO when you are applying for auto, mortgage, credit cards, or other types of loans. It is important to know that having a myFICO score shows the degree of change in your credit rating either positively or negatively.
Although the 28 FICO Scores may not be the actual FICO Scores that lenders use, they provide close estimations based on the same FICO models. This way consumers can get a clear picture of how positive or negative their credit rating looks like currently. A much higher or lower myFICO score suggests to the consumers that actual lender FICO scores are probably moving in the same direction too.
If you have very high myFICO scores, then you are sure that when you apply for new credit, the lenders will probably report high FICO scores as well. However, if your myFICO scores are low or falling, this means that you may be required to take certain steps to correct your credit status before applying for loans to increase your chances of approval.
Displacing traditional credit score reporting, myFICO offers consumers direct access to 28 FICO credit scores derived from the same models used by lenders and encourages people to learn more about their credit risk rating in the current economic environment at the time of big borrowing.
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