FICO vs. FAKO–Does it Matter?

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Recently a number of readers have dismissed free credit score services like Quizzle and Credit Sesame, noting that these services don’t provide you with your “official” FICO score. The argument goes like this. These FAKO scores, as they’re called, don’t show you the actual credit score that lenders will use. Therefore, the scores are worthless. Even worse, they may mislead consumers into thinking that their “real” FICO scores are better or worse than they really are.

There are several implicit claims within this argument–

  1. The FICO score you can get for a fee is the same score a lender will see when you apply for a loan or credit;
  2. The FAKO score (called an “educational score” in the industry) is at best unreliable and at worst misleading; and
  3. The only reason to get your credit score is in preparation for applying for a loan.

You can probably guess what I think about the FAKO vs FICO controversy. The truth is that the FICO score that you can get access to is almost certainly different than what a lender will see (read my article about credit scores and a recent article I wrote for H&R Block to see why). And free services that offer educational scores are a good proxy for your FICO score and a great way to understand and improve your credit.

So I decided to undertake an experiment. Because of refinancing my home mortgage and three rental properties, I have my “official FICO score” from two different credit agencies. So I decided to buy my FICO score and get my score from Quizzle, Credit Sesame, and Credit Karma. With these scores in hand, I could then compare them.

My expectation was that all of these scores would be different. But I also expected the scores to be in a tight range of 20 to 30 points.

Here were the results:

Official Credit Scores

My credit scores from the two refinances varied, but not by a lot:

  • Equifax FICO Score: 757
  • TransUnion FICO Score: 750

These scores were pulled about two weeks apart, so that could explain in part the difference. They were taken from two different credit reporting agencies, which could also explain the difference.

My FICO Score

I pulled my FICO scores via myFICO from both TransUnion and Equifax on the same day. The results were off by just 4 points:

  • TransUnion: 745
  • Equifax: 741

As you can see, however, both scores varied from the scores the mortgage companies had. One might ask if a difference of 10 to 20 points really matters. The short answer is absolutely. As you’ll see in my article on What Credit Score You Need to Buy a Home, the interest rate you’ll get can vary significantly between a score of say 750 and 760. Rates don’t change every 10 points, but if you go below certain thresholds, the rates can rise.

If you want to get your score through myFICO, they are offering their Score Watch product the first month for just $4.95 (regularly $14.95).

My “FAKO” Scores

My FAKO scores were all higher than the official scores used by the lenders during my refinancing binge:

  • Quizzle: 786 (Quizzle offers what’s called a CE Credit Score that’s based on your credit report from Experian with a range of 350 to 850)
  • Credit Sesame: 773 (Credit Sesame uses Experian’s National Equivalency Score with a range of 360 to 840)
  • Credit Karma: 760 (Credit Karma provides a score based on your TransUnion credit report with a range of 300 to 850)

So out of the three FAKO scores, Credit Karma came the closest to the FICO scores used for my refinancing. What’s interesting for our purposes is that my Credit Karma score was closer to the actual score used by the mortgage lender than my “official” FICO scores from myFICO.

What Does It All Mean?

An educational credit score can be a very helpful tool to understand your credit and improve your score. Don’t let people who call the scores “FAKO” deter you from taking advantage of these free services.

If you are planning to buy a home in the next year or two, sites like Credit Karma have one additional advantage–free credit monitoring service. The last thing you want is something showing up on your credit report by mistake. With credit monitoring services, you’ll know each time a change is made to your report.

So if I were concerned about my credit score, I’d take advantage of Credit Karma, Quizzle, and Credit Sesame.

Published or Updated: April 3, 2014
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. Very interesting experiment, thanks for sharing your numbers.

  2. Your data is flawed unless you pulled all scores at the same time and all the sources use the FICO scoring model but Fannie used the version 04 and MYFICO offers the FICO8 score. I am not sure on the version for the others but my guess would be 04. So if it is not the scoring model, than why would the scores be different? PS the Real FACO score is Vantage.

    • Jeff says:

      @Dave Sullivan

      There is no such thing as a “real FAKO” score. The definition of “FAKO” is any credit score that isn’t a FICO score. Also, the Vantage score is out of 990 so it’s very different from what the credit bureaus will use.

      The formulas are definitely different. Think about it: how would these sites know what the exact formula is? Especially when the real FICO formulas are proprietary information. For example, my FAKO score (they call it TransRisk) on Credit Karma which is supposed to model the TransUnion score, is 690. This score is substantially lower than my actual FICO TransUnion score (by about 60 points). These were also pulled with in about a weeks time (about a month ago). You get to update the credit karma score frequently– yet, it still remains 60 points below my actual score.

      It’s pretty obvious why they might be off for some people: these FAKO scores are guesses from “soft-pulls”. They won’t give you the exact score because they don’t have the same formula.

      These sites are interesting to use but shouldn’t be depended upon. At this point, I’m not sure if having your info stored on their databases is worth the free educational guess that they are giving you.

  3. CultOfMoney says:

    I generally don’t mind pulling the free scores that estimate what your actual score is. Again, it’s easy and free, and it gives you an idea of what your score is, and that’s all I’m usually after. Whether the score they tell me is 796 and my actual is 785, I don’t really care, as long as they’re close. nice article, thanks!

  4. Very neat. I didn’t even know that Fako existed!
    Thanks for the analysis =)

  5. Roger says:

    I agree with your analysis. The scores can very greatly and evenr between the 3 major agencies. It is just a guage to monitor where your at and if there is comething you need to be doing to get that score corrected or heading in the right direction. Don’t expect to match what your lender pulled or will pull.

    After 30 years in the business you need to go with the flow and use them for what they are, if your on the edge it could make a difference in your rate from a lender, but in the short run you can’t do anything about that anyway.

  6. Gina says:

    It is very true all 3 scores will never be the same but should have a close vicinity. All 3 credit agencies may not have the same information. Some creditors only report out to 2 credit bureaus and inquiries usually show up on one or two of the agencies.
    Credit is important. I lost mine through a divorce and it took me 5 years to gain it back by paying off my creditors. I just bought a house on my own with a great rate:)

  7. Khan says:

    Well, simple is if you need to pull credit score, get it from the official site, if i want to take out mortgage worth of $300K, i dont mind paying $10 or so to get official score, just want to see what lenders will be looking at; btw i pay $8 a month to CITI to monitor and gives me official scores, will keep it for few months, then sign off..but nice analysis

  8. Astraea says:

    An interesting experiment, but I have to disagree with your conclusions. While one of the fako scores is closer to your lender-provided score, the myFICO scores are closer than the other two. And there is one major flaw in the experiment – your refinace would have changed your score.

    I assume you pulled the myFICO scores shortly after or during the refinancing process, because if it was weeks later and the new loan appeared we would expect a far more dramatic change in score, but the new credit inquiries would show up more quickly, since they are done at the start of the refinancing process. The myFICO scores show an hit of ~10 points compared to your lender-provided score, which is about what a new loan inquiry does to a credit score. That would seem to point to the myFICO scores being spot on accurate.

  9. Michelle says:

    I so wish I would’ve found this article months ago. I, like many young, inexperienced adults, thought that the “Fako” scores were what mortgages companies would be looking at when trying to qualify for a home loan. It all makes sense now. Thanks for the input.

    • Rob Berger says:

      Michelle, glad the article helped!

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