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Find Your True Credit Score

Getting an accurate number can be tricky — here's how to make sure you really know your credit rating

by: Liz Weston, from: AARP The Magazine, July/August 2011 issue

Dear Liz: I bought my credit score from one of the big-three credit bureaus, but when I applied for a loan I learned my "real" score was much lower. Why are the bureaus allowed to sell fake scores?

Personal finance columnist, Liz Weston blogs at asklizweston.com. — Photo by Art Streiber

Many consumers don't realize there's more than one credit-scoring formula. In addition to the well-known FICO score, each of the three credit-reporting bureaus — Equifax, Experian, and TransUnion — sells so-called consumer-education scores. Then there's VantageScore, a FICO rival developed by all three bureaus that uses a scale ranging up to 990 points (the top FICO is 850). Critics often call these upstarts "FAKO" scores, because most lenders currently judge your creditworthiness using the FICO.

Boost Your Credit Rating

Want a good credit score? Act the way credit-scoring formulas want you to act. That means regularly using credit accounts. Apply for new credit sparingly — and leave old accounts open if you want to get and keep top scores. Check your credit reports regularly for errors, don't let disputes go into collection, and pay bills on time. A single skipped payment can turn a great score into a lousy one overnight.

The bureaus say a credit score is a credit score, so it doesn't matter which one you get. But it matters to them: When bureaus sell their own scores, they don't pay royalties to the Fair Isaac Corporation, which owns the proprietary FICO formula. Fortunately for consumers, a law that takes effect July 21 will clarify the difference among the scores. The new regulations say that if you don't get the best terms on a loan, credit card, insurance policy, or utility service, you must be shown — for free — the score used to judge you. And most scores revealed will be some version of the FICO.

Next: How to get insurance when your credit score is low. >>