Can Your Credit Score Be Lower Than Your FICO Score?
Understanding the nuances between credit scores and FICO scores can be essential for individuals seeking financial stability and access to loans. While credit scores are used across the board, FICO scores are one of the most widely recognized and used scoring models. It's a common misconception that these scores are always in sync, but this article will explore the scenarios where your credit score might be lower than your FICO score and what this means.
What Are Credit Scores?
First, it's important to differentiate between credit scores and FICO scores. Credit scores are a measure of an individual's creditworthiness, compiled by credit bureaus like Experian, TransUnion, and Equifax. These scores are based on credit reports, which contain information on your payment history, credit utilization, length of credit history, and any inquiries made on your credit. Credit scores can range from 300 to 850, with higher scores indicating better creditworthiness.
What Are FICO Scores?
FICO scores, on the other hand, are a specific type of credit score that are used by financial institutions, lenders, and other organizations to make lending decisions. They are based on a mathematical model developed byFair Isaac Corporation. While similar to credit scores, FICO scores can have slight variations depending on the credit bureau that provides the report. FICO scores are also subject to regular updates and changes, which can affect the overall score.
The Difference Between Credit Scores and FICO Scores
So, can your general credit score be lower than your FICO score? The answer is yes, and there are several reasons for this:
1. Data Differences Across Bureaus
Different credit bureaus compile information from different sources, and there may be discrepancies between the data they receive. For example, one bureau might have accurate and up-to-date information about a loan or credit card, while another might have outdated or incorrect data. This can lead to variations in scores calculated by each bureau, and it’s not uncommon for one FICO score to be higher than another.
2. Calculation Methodology Variations
While FICO scores are widely recognized, other credit scores might be calculated using different methodologies. These alternative scores may include additional factors not considered in FICO scores, leading to potential discrepancies. For instance, some scores might place more weight on timely payments, while others might give more importance to the age of credit accounts. These differences can result in varied scores even for the same set of data.
3. Speed of Updates
Some credit scores are updated more frequently than others. FICO scores, for example, are updated every 30 to 45 days, whereas other scores might be updated monthly or even weekly. If a negative event (such as a missed payment or a new account) occurs shortly before a score is calculated, it might not be reflected in the most recent FICO score, leading to a higher overall credit score.
Examples and Real-World Scenarios
Consider the case where several negative events occurred just before a FICO score was calculated but not before an alternative score. This could result in a lower credit score relative to the FICO score. For instance, if a bankruptcy or a significant delinquency happened right before a monthly update to a score, but not to the FICO score, the non-FICO score could drop significantly.
Actions to Take if Your Scores Vary
When you encounter a situation where your non-FICO score is lower than your FICO score, it's important to take action. Here are some steps you can follow:
1. Review Your Credit Reports
Order your credit reports from the three major credit bureaus (Experian, TransUnion, and Equifax). These reports will provide you with detailed information about the factors affecting your credit scores. Look for any discrepancies or errors that could be lowering your scores.
2. Address Missed Payments or Inquiries
If you find missed payments or inquiries that shouldn't be on your reports, contact the credit bureaus to dispute the errors. Payment verification and correction of inquiries can improve your credit score over time.
3. Consult a Credit Repair Expert
Consider reaching out to a reputable credit repair service. For instance, if you found that your credit score could improve from 430 to 600, and eventually to 820, with the help of a credit repair specialist, you might want to consider similar services for your FICO score. Contacting someone like David at 469-336-8856 for a free consultation could be beneficial.
Conclusion
Understanding the complex relationship between credit scores and FICO scores is crucial for maintaining a good credit history and securing favorable financing. It's not uncommon for your non-FICO credit score to be lower than your FICO score due to differences in the way they are calculated and updated.
By reviewing your credit reports, addressing any discrepancies, and consulting with credit repair experts, you can work towards improving your credit scores.