There are so many offers for free credit scores. You see them everywhere: on TV, in magazines and just about every website you look at. Of course, each ad will try to convince you that they have the best way to check your credit score. But which one can you trust? Will it really be free? Is there a catch? These are the obvious questions. But the most important question is not so obvious. It’s a question many people don’t even think about asking. The question is: Which credit score are they offering?
Your credit score is based on the information in your credit report. Each item in your report is given a numerical value, and that value is either added to your score if it’s a positive item, or subtracted if it’s a negative item. The companies that sell credit scores (or offer them for “free”) can use different formulas to determine your score. Each of the formulas may assign a different value for the same item on your report, so obviously they will come up with different scores. To make matters worse, some of the formulas that are used are based on different scales. That means a score of 740 from one formula might be considered a good score, but 740 might only be a fair score from another.
One of the scores is much more meaningful than the others. Approximately 90% of all lenders look at FICO scores when they are evaluating applications for credit cards, loans and mortgages. When you look at your FICO score, you see what lender will most likely see. A FICO score is determined by a formula that is only used by FICO (formerly the Fair Isaac Corporation). Companies that do not have access to the FICO formula have created their own formulas as a way to compete with FICO. These other formulas can only give you an estimation of your FICO score.