Learn about credit scores from an experts perspective
Credit Scoring works similar to a card game with a specific set of rules and certain ways that you can score points and win. Learning the rules of the game will give you the power to understand how to maximize your credit scores and obtain the scores you need to fund your dreams.
The first step to learning how to play this game is to identify the players.
THREE MAJOR CREDIT BUREAUS
Experian, TransUnion and Equifax are the three major credit agencies being used by a majority of the lending industry. Some of your national lenders will pull a credit report which contains information from all three credit agencies. This type of report is called a Tri-Merge Report. Most local banks as well as some national banks will pull a report from only one credit agency. Experian is the report that most auto lenders will check.
The three credit bureaus are regulated by Consumer Protection Laws such as Section 611 of the Fair Credit Report Act which allows us to dispute any item on our credit report. This is the law that most credit repair companies will use to get accounts deleted from your credit report.
There are many other credit scores on the market today but the lending industry uses FICO scores. Fair Issac Corp has a near monopoly on credit scores. When a bank, lender or creditor is looking at your score it's going to be a FICO score product 9 times out of 10.
The credit scores systems are just algorithms used to evaluate the information on your credit report. FICO makes all sorts of different algorithms and therefore there are many different credit score products on the market.
The most commonly use FICO score products are
FICO 04 (used to score your TransUnion report)
BEACON 5.0 (used to score your Equifax report)
FICO V2 (used to score your Experian report)
WATCH OUT FOR FAKO SCORES
The industry brands any type of credit scoring model not made by FICO a FAKO score. They aren't necessarily fake scores but lenders don't use them so they really don't have any value. Some of these scores are only sold to consumers and not to banks.
Examples of FAKO scores are:
Fair Isaac Corp has a new credit score called the FICO 08. Most banks haven't started using it yet. Until the industry shifts over, we should be primarily concerned with the FICO 04, Beacon 5.0 and FICO V2 models.
CREDIT REPORT BASICS
The three credit agencies which are most commonly used by the finance industry (mortgage, auto, business, personal, etc) are Equifax, Experian and TransUnion.
Sorry, still under construction. If you'd like to know more, please call us. We'd love to talk your ear off about credit scores and financing. (808) 651-5331 Jack Olson Jack@jackolsoncreditrepair.com
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