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myFICO

The Confusing World Of Credit Scores And Some Pointers For Getting FICO Scores For Cheap

by golbguru on March 6, 2007

It’s about time I checked my FICO credit score ( rather multiple credit scores ) - been 6 months since I applied for a couple of 0% APR (balance transfers) cards and transferred large balances from the cards to my HSBC Direct account. Now, I want to see if things have gone haywire (or not) after the balance transfers (this will help me plan my future credit card arbitrage moves). Trying to find the best deal for your credit score is really a pain if you don’t know where to look - this led me towards doing some research on the subject, the results of which are described below.

I have compiled all the information I could find and added some recommendations towards the end to highlight the best ways of getting your credit score for cheap (I wanted to use a ranking system…but that might mean comparing apples and oranges, because some of these products are conceptually different than the others). If you know of any other reliable sources of obtaining credit scores for cheap, please feel free to share the information.

Before I get into the details, I would like to draw your attention to the fact that Experian does not offer FICO scores through it’s website and TransUnion offers an in-house *TransUnion* score (not a FICO score) with some of it’s programs. So don’t just rush into buying any score that first comes to your attention…read and understand what it means.

I don’t know why they are making it so complicated for the common man. Between the three credit rating agencies, you can get 6 different credit scores (3 different FICO scores for 3 agencies, TransUnion score, Experian Plus score, and VantageScore). Thank god there is just one VantageScore, not three different ones for the three agencies.

To add to the confusion, each credit rating agency and myFICO.com sell different types of products with different types of scores and it really takes a while to figure out what product is using what score. The list below will make the process simpler for some of you…it includes all credit score products available through the three agencies and through myFICO.com. If there are more out there, I will update this list accordingly.

Also, just to be clear, I am talking only about credit scores…not credit reports (you can get free credit reports via AnnualCreditReport.com). My main objective is to find ways to get the score for less money …irrespective of whether it comes with a credit report or not. Another thing, there are no referral links in here…all links for your information purposes only.

Credit scores from TransUnion [Updated: March 27th, 2007]

TransUnion is the master of confusion when it comes to credit scores. It has two different websites www.transunion.com and www.transunioncs.com. On transunion.com (which takes you to truecredit.com for your scores), all scores available are ONLY TransRisk scores (not FICO scores)…which are some in-house scores generated by TransUnion. I was not aware of this before one of the readers made a comment regarding this issue.

I had to call TransUnion in order to figure out where I could get my FICO scores and then they mentioned www.transunioncs.com. I have no idea why TransUnion is doing this two-websites thing….and why there is no mention or link to the FICO scores website on their main website.

Anyways, here is what TransUnion offers on it’s www.transunion.com website (pretty much useless scores):

  • TransUnion offers a 30-day free trial of the TransUnion Credit Monitoring program. This program will give you access to your TransUnion credit report and your Trans-Risk credit score based on the credit report. The potential cost of laziness (if you don’t cancel within your trial period) is $9.95 per month. This is not a FICO score.
  • It also offers a 3-Bureau Credit Monitoring program for $14.95 per month. No free-trial offer. This thing provides all three credit reports and all three Trans-Risk scores. This is not a FICO score.
  • Watch out for this “3-in-1 Credit Report and Free Score” one-time purchase offer from TransUnion for $29.95. This is a different offer than the two above and it provides a *TransUnion* credit score….not a FICO score.

Here are the FICO score offers from TransUnion’s www.transunioncs.com (transunioncs stands for TransUnion Consumer Solutions) website:

  • TransUnionCS offers Single Credit Report + FICO score. A one time TransUnion credit report and score for $14.95. There is no trial period.
  • It also offers 3-in-1 Credit Report plus FREE FICO Score. This program offers three credit reports but only one credit score…and that is based on TransUnion credit report. The one-time cost is $34.95. No trial period.
  • There is also a credit monitoring product available through this website. This product provides you with your TransUnion credit report and FICO score 4 times a year at the cost of $19.95 per quarter($79.8 per year). No trial period.

Credit scores from Experian

  • Experian offers a 30-day free trial of the Triple Advantage program, through which you can get all 3 credit reports and Experian Plus Score. Note that the Plus score offered by Experian is not your FICO score. Plus and FICO are similar scoring systems but not the same. Personally, I only care about the FICO scores…so this doesn’t sound attractive to me. Potential cost of laziness (if you don’t cancel within your trial period) is $12.95 per month. (annual cost: $155.4)
  • A one-time, non-subscription purchase of Experian credit report and score will cost you $15.
  • Experian also offers credit scores calculated using a new credit rating called VantageScore for $5.95. Again, as in the case of the Plus score, this score has nothing to do with your FICO score and hence, doesn’t impress me.

Credit scores from Equifax

  • Equifax offers the Score Watch program through which you can get your FICO scores based on Equifax credit report. Monthly subscription cost is $8.95 and there is no free trial offer. (annual cost: $107.4)
  • Equifax also offers a non-subscription (one time purchase) program called Score Power for $15.95. With this you will get your Equifax credit report and your FICO score based on that report.

Other sources of credit scores

There are a multitude of third-party credit score providers that go through one of the above agencies to obtain your credit score. Personally, I would not punch in my all my personal information on such third party websites. Apart from the risk of having your identity stolen (or misused), there is also a risk of finding yourself signed up for a ton of trashy snail-mail and junk email if you go through some arbitrary credit score information provider. If you insist on using such websites, make sure you comb through the privacy statements and opt out of any optional services that they might stick to your application.

  • The only exception to this rule is AnnualCreditReport.com on which you can get a credit score for $7.95 with your once-a-year free credit report from each credit rating agency (I need to verify this in a better way). AnnualCreditReport.com does not offer credit score as it’s own product…ultimately it’s offered through the individual credit agency.

Credit scores directly from myFICO

Buying your scores directly from myFICO has one advantage..they are just FICO scores (duh!). myFICO offers 5 products as follows:

  • myFICO® Identity Theft Security Deluxe: this one gives TransUnion credit report and the corresponding FICO score at $4.95 per month. No free-trial offer. (available for 1 annual payment of $49.95)
  • Score Watch: provides Equifax credit report and corresponding FICO score for $8.95 per month. 30-day free trial is available with potential cost of laziness at $89.95.
  • FICO standard: just gives a one-time score and credit report for any of the three credit rating agencies for $15.95 each. This is an incredibly bad deal…just stay away from this one.
  • FICO Deluxe: All three credit reports and credit scores with a one-time purchase for $47.85.
  • Suze Orman’s FICO kit: Suze Orman’s advice and all three credit reports and credit scores with a one-time purchase for $49.95. I don’t know why myFICO has special love for Suze Orman. But, it is noted that the product above (FICO Deluxe) has everything except the Suze Orman advice and it just costs $2.1 less than this Orman-endorsing product. I wonder if Orman’s advice is not much worth than $2.1 then, is it? :) I won’t recommend this.

Some recommendations on purchasing credit scores for cheap

[Updated March 27th, 2007: according to TransUnion, it does not provide *FICO* scores on www.transunion.com. When I called them up to ask about checking my FICO scores, they directed me to www.transunioncs.com. The following information has been updated to reflect the change]

Based on the above information, it is clear that the cheapest way to get your credit scores is by signing up for free trials and cancelling them before the trial period expires (some people may have ethical issues here and I understand that). If you are just looking at scores for one-time comparison purposes, here are my top recommendations:

  • If you want a score based on Equifax credit report, the best option is available on myFICO website through the Score Watch program. Free trial for 30 days. If you forget to cancel, it’s $8.95 per month.
  • If you have exhausted the free trial offers in the past, your next best bet is myFICO® Identity Theft Security Deluxe through myFICO website for getting a TransUnion credit report and score. Cancelling within a month will cost you just $4.95.
  • If you want to look at all three credit scores and reports just once using a single product, your best choice is FICO Deluxe through myFICO website. It will cost you $47.85. Alternatively, you could buy individual credit scores from myFICO website for Equifax ( Score Watch , $0 free trial - cancel within one month), TransUnion (myFICO® Identity Theft Security Deluxe, $4.95 - cancel within one month), and Experian (FICO Standard, $15.95)…this way all three credit scores will cost you only $20.9. Just remember to cancel them during the trial period.
  • Stay away from Experian’s website unless you want the Plus score or the VantageScore.
  • Stay away from TransUnion’s www.transunion.com website. FICO scores are only available on www.transunioncs.com.

If you are looking for year-round continuous monitoring, then go for this:

  • myFICO® Identity Theft Security Deluxe ($49.95 per year, no free trial) for TransUnion credit report and score. A better option is to purchase the plan and then cancel within a month. That will cost you just $4.95 per month. Doing this every three months will cost you just $19.8 per year……and quarterly monitoring is sufficiently *continuous* for credit scores, in my opinion.

Update: Free credit score offer suggested by a reader

An avid reader of this blog, Gaming the Credit System, mentioned a credit card offer from Washington Mutual that comes with free online acces to credit score. In case you find the card attractive, the free score is an additional incentive. :) Thanks GCS.

Most credit scores will come in a combination of score+ credit report, so don’t go about buying a separate report if you are ordering a score.That’s all for now, good luck with your next credit score purchase. I think by now you fully understand why this stuff may be really confusing to some people. :) If you have something more to add, just drop a line and I will include it.

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Bad Credit Hurts - How And Why?

by golbguru on December 21, 2006

Lets see the “why” first, and then I will mention a few points from a Bankrate.com article about “how”.

Why does bad credit hurt?credit-report
Come to think of it, your credit history is really keeping a track of your financial responsibility more than your “credit-worthiness”. People who lend money to you are interested in knowing how “responsible” you have been in the past with instances when people lent you money. For lenders, credit-worthiness is analogous to financial responsibility, and that’s what they are looking for in your credit history. For these people your credit history answers this question: If I lend this person some money, what is the probability that he/she will return it? Better credit history means better probability of the lenders getting their money back. No rocket science in this.

People who don’t directly lend you money may also be interested in knowing how financially responsible you have been in the past. These include: your employer, your apartment landlords, your utilities company…and almost anyone else who “lends” you something (products or services) of significant value. These people are purely interested in your financial responsibility rather than the literal “credit-worthiness”. Why? because lack of financial responsibility is always associated with costs. One may argue that making late payments has nothing to do with your job. But, if employers see too many late payments on your credit report, whether you like it or not, “lack of responsibility” is the first thing they will conclude from your credit report. A couple of late payments to credit cards (or other agencies) could be explained as freak mistakes, but more late payments are a sure sign of one or more of these characteristics: you are not organized, you are careless, you spent more than you could afford, after making one late payment you did not take efforts to avoid the second one..meaning either you are a slow learner or you do not have the ability to recognize the problem. All these characteristics can be potential costs for your employer at some point in the future. Your credit history answers the following questions for the respective people:

Employers: Is this person going to mess things up at some point in time and potentially cost us (money/reputation)?

Landlords: Is this person going to pay the rent on time?

To sum up, whether they are lending you money, something else, or employing you, they are all asking the same thing:

Are you financially responsible?

Other than your credit history, what else can provide a well documented answer to that question? Bad credit history means the answer to the question is NO and everyone knows what will follow from then on. Credit scores (like myFICO, Vantage) are formulated in a way to reflect your credit history; there might be loopholes in the formulae used for calculating credit scores, but as long as we don’t have a better answer…these scores will be a measure of our financial responsibility and we need to suck it up.

How many ways can bad credit hurt you?

I stumbled across an article Bankrate.com titled “Bad credit hurts in many ways“. Listed below are some areas where bad credit rating can hurt you. To keep it brief I will just stick to the list, to read more detailed explanations click here.

  1. Car loan
  2. Car Insurance
  3. Job
  4. Housing
  5. Utilities
  6. Cell Phones
  7. Elective Medical Procedures
  8. School Loans
  9. Marriage (what !?)

Wow..that “marriage” on number 9 made me think “I didn’t know people checked credit scores to marry” :). Obviously, it’s not about that.

Btw, Bankrate missed a big one here: Mortgage !! They mention “housing” but only in context of renting apartments not buying homes. Bad credit can really cost you a lot of money in the long run due to high mortgage rates.

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Tell Me Why Is This Man Smiling On myFICO Website? Does He Understand The Cost Of His Low Credit Score?

by golbguru on November 1, 2006

After you finish reading this, try and give some innovative reasons that might be making the man smile. :)
So, I was just went to myFICO.com to check my FICO score (made a huge balance transfer and now I am worried about my score…this is another story). On their main page, I see these three people smiling at me with their FICO scores halo-ing around their heads. Here is the image:

fico1.2 credit-score

They got it right with the ladies on either side of the guy. The lady on your right has a wide smile due to her excellent credit score. The lady on your left has a not-so-wide smile because she realizes she will be paying more for her loans than the other lady. But the man? why is he smiling? :) Does he realize what it means to have a low credit score?
Here is a copy of a table right below the image on the website:

fico3.0 credit-score

The man lies somewhere near the bottom of the table (marked by an arrow and a box). He probably doesn’t realize that, for $300,000 borrowed, he will be paying $457 per month more than the lady with the 790 credit score. That translates to a total of $164,520 over the term of his 30 year mortgage ! …and that is certainly noting to smile about. Small rises in APR probably mean nothing to some people unless they see how it affects their total cost. The lady with the score of 724 probably realizes that and hence the subtle smile :). She will paying $43 per month more than the other lady and it will cost her an additional $15,480 just because she doesn’t have a FICO score more than 759.
In my opinion, the image should look like this:

fico2.2 credit-score

Now, you don’t want to look like that, do you? Make sure you understand what your credit score means to you and how much it will affect the cost of your debt/loan/mortgage. Fish around the internet a bit and find out all you can about credit scores and how to improve them. Almost all the major credit reporting agencies and some credit card websites have free tutorials about improving credit scores. Read them.

Btw, here are a couple of reasons why the man might be smiling anyways:

  1. He is not going to borrow anything anytime soon and doesn’t care about his credit score.
  2. Just because he is photographed between two chicks.

Anymore reasons you can think of?

Some resources (these are not ads so feel free to click on them):
Bankrate.com : Mortgage Payment Calculator
myFICO.com : Improving Your FICO Score
Experian.com : Improve Your Credit Score

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MSN: Weird Stuff That Hurts Your Credit

by golbguru on September 19, 2006

Interesting article on MSN about how you can hurt your credit score. Here is the hot list of weird things that can do the damage (my comments are in italics):

1. Credit company not reporting your true credit limit (Capital One) (Not really weird)
2. Credit cards with no preset spending limits (Amex) (Not really weird)
3. Disappearing deliquencies or brankcruptcy (Weird)
4. Balance transfers (Not really weird)
5. Opening new credit card accounts (not a big deal), closing old ones (can be a big deal), but everyone knows this by now.
6. Settling old debts (Weird)
7. Tickets and fines (Expected, Not really weird)

The article does not mention this, but paying some bills late can also hurt credit scores. One example is T-mobile. I know for sure that paying your T-mobile bill late goes as a negative entry in your credit report. I don’t know how they do it, but they confirmed that they report late bill payments.

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