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FICO Score vs Credit Score [What's the Difference?] - YouTube
Channel: Mind Over Finance
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what is the difference between a credit
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score and a FICO score hey guys this is
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- and this is lying over finance we're
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gonna keep this video shortly sweet
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today I'm no credit expert but this is a
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question that I had for myself so I
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thought we'd do some digging and
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hopefully it'll help somebody else out
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there to understand the difference -
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first let's take a look at the
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definition of a credit score
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from investopedia a credit score is a
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number ranging from 300 to 850 that
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depicts a consumers credit worthiness
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the higher the credit score the more
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attractive the borrower a credit score
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is based on credit history number of
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open accounts total levels of debt and
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repayment history lenders used credit
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scores to evaluate the probability that
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an individual will repay loans in a
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timely manner
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so essentially your credit score is this
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number that lets lenders know to what
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extent they can trust you to pay back
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the money that they lend you while it
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may not be a perfect system how you've
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handled your debts in the past are a
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pretty decent indicator of how you're
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gonna handle new loans at least in
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lenders eyes but it makes a lot of sense
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and next let's look at the definition of
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a FICO score also from investopedia a
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FICO score is a type of credit score
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created by the Fair Isaac corporation
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lenders use borrowers FICO scores along
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with other details when borrowers credit
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reports to assess credit risk and
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determine whether to extend credit FICO
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scores take into account various factors
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in five areas to determine credit
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worthiness payment history current level
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of indebtedness types of credit used
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length of credit history and new credit
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accounts and your FICO score is also a
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number from 300 to 850 that lets lenders
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know how trustworthy you are or how
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credit worthy you are so if your credit
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score is this number from 3 to 850 that
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tells how credit worthy you are and your
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FICO score is this number from 300 to
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850 that says how credit worthy you are
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what the hell is the difference so I
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went hunting around
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do my research in what I found is
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there's no really clear line that tells
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you the difference between your FICO
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score and your credit score the biggest
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difference I see isn't how they're
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calculated so your credit score is going
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to come from one of the three major
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credit bureaus
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that's Equifax Experian and TransUnion
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and a good way to remember those is the
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acronym eat and FICO the Fair Isaac
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company isn't one of the official
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bureaus but the Fair Isaac company is
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partnered in some way or connected in
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some way to each of those bureaus and
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according to their website back in 1991
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the FICO credit risk scores were made
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available to all of the major credit
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bureaus so I think back then back in 91
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that's when the FICO score the FICO
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Analytics became much more valued much
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more trusted because I remember back in
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the day hearing about beacon scores and
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I don't really hear much about them
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anymore
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I'm sure they're probably still a thing
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but that's just another model so the big
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difference between your FICO score and
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your credit score is just how they're
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calculated they're both two different
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models that calculate a snapshot score
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of your credit history at a single point
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in time and just a quick note about FICO
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scores so when I went to my FICO comm to
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pull my own FICO score I was expecting
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to see one number and I thought maybe oh
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this will be my FICO score but that's
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not what I got I got several different
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versions of my three scores from the
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different credit bureaus because FICO is
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this analytics company I think it's just
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kind of partnered up with each of these
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three credit bureaus and it gives it's
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version of your credit score based on
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the numbers from each one of those
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agencies but to be honest I don't really
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think you need to worry about the
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difference between your credit score and
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FICO score they're related I don't know
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anybody who's like my credit score is
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bad but my FICO score is good know if
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your credit is bad your FICO score is
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bad believe me I know firsthand I follow
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the whole middle score approach where
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you just take the middle school
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or from the three bureaus because it
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keeps you from having to do all that
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worrying and fussing you know the
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numbers are gonna be slightly different
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from Bureau to Bureau but by and large
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if you've got good credit you've got
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good credit I know today's video was a
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little bit short but hopefully you still
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got something from it there's a question
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I definitely had and hopefully you're a
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little bit clearer on the difference
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between your FICO score and your credit
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score and I'll catch you in the next
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video
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