FICO and FAKO Credit Scores

Have you ever heard the term FAKO score? What about FICO score? Seasoned Consumerist readers will know the difference but if you’re new to the whirlwind credit industry, you may not.

FICO stands for Fair Isaac Corporation and refers to the algorithm they use to calculate your credit risk and credit worthiness. There are three credit bureaus collecting and collating your credit information (Equifax, Experian, TransUnion) and a FICO score is calculated using that information in Fair Isaac’s proprietary equation.

So what are FAKO credit scores? It’s a play on the FICO acronym but its a derogatory term for any credit score that isn’t a FICO score. For example, the three bureaus tried to get together and create a VantageScore to compete with FICO. Also, each of the bureaus produces their own score, only one of which is truly FICO:
- Equifax produces a score called BEACON which is a true FICO score based on information in your Equifax credit report. (I originally erroneously called BEACON a fako score, thank you to readers who corrected me)
- Experian produces its own score called the Scorex and Scorex PLUS, again it’s their own calculation based on information in your Experience credit report.
- TransUnion produces its own credit score called the Transrisk New Account score. It’s their own calculation based on information in your TransUnion credit report.

The reason they are called FAKO credit scores is because most lenders and credit grantors use FICO scores, not the proprietary ones. Knowing your FAKO score maybe helpful but when you could get a FICO score for the same price, why bother?

You can always get your credit report for free from each of the three bureaus every twelves months through AnnualCreditReport.com. Your score, however, won’t be free. The only way to get that is to sign up for a free FICO credit score trial and cancel after you see your score. If you aren’t planning on trying to obtain credit, I recommend using a credit score estimator, they are accurate enough.

If you enjoyed this article, you can see more from Jim at his personal finance blog, Bargaineering.com.

(Photo: pyxopotamus)