Credit Scores & Score cards – Your FICO Credit Score and FICO Scorecards
Most everyone has knowledge of what a FICO credit score is (more info in the video/education section of our website www.bestcreditrx.com) however much less known is the different scorecards used. This really complicates things but it is good knowledge to have. We know there are over 50 different FICO credit scoring algorithms in use. Some are specific to an industry (auto, mortgage, etc.). Right now FICO has rolled out FICO XD, last year was FICO 09, year before that FICO 08. The media hype about medicals not having any effect on your scores, rentals being included is true BUT HERE IS THE PROBLEM; no one is using these versions. For a mortgage a combination known as FICO classic is used (a combination of FICO 4, FICO 5, and Beacon 2 (a FICO product). These are the tried and true formulas and the banks like them. More confusion; many go to CreditKarma.com to get their free scores, but that site uses Vantage a product of the credit bureaus and not FICO.
Scorecards are used within each version of FICO to group like people. For example, someone with a bankruptcy would be grouped on a scorecard with others who had a bankruptcy. Someone with multiple charge-offs will be on a scorecard with others with multiple charge-offs, and so on. Sometimes what happens is as someone’s credit picture changes, they jump to a different scorecard. This does weird things to the credit score. It can boost it, drop it, or cause it to get stuck. FICO and the credit bureaus will never tell you what scorecard you are on or if you changed. Why? Because they do not have to and they claim the algorithms and scorecards are proprietary. This is why you can have virtually the same credit score as the guy down the street yet he has had a bankruptcy and you have never had one. I see reports all the time that I am thinking that the score will be scary just to be surprised to see its better than some people with far less. Scorecards are the reason why this happens