Why You Need Your FICO Scores, Not Your “Free Credit Score”
Did you know that 90% of top lenders use your FICO® Scores to determine loan interest rates, terms & approvals?
In fact, I’ve applied and been approved for 3 different mortgages, each time my FICO Score is what they looked at to determine my credit worthiness.
I’ve also applied and been approved for around 10 auto loans (wow, 10?). Again, each one of those lenders used my FICO score to determine my eligibility for the loan, as well as my interest rate and loan terms.
So why are you checking any other type of credit score? Because it’s free?
Here’s my advice:
Stop being a cheapskate!
Most “free credit score” services (Credit Karma, Credit Sesame, etc.) provide what’s called a VantageScore, not your real FICO Score.
VantageScore = Free Credit Score = “FAKO” Score
Most likely, if you’ve checked your “free credit score” within the last few years, you have received your VantageScore 3.0. Also known as an educational score, or a “FAKO” score, because it’s a cheap imitation of your true FICO score.
What’s a VantageScore?
It’s a credit scoring algorithm jointly developed by the “Big 3” credit bureaus (Equifax, Experian & TransUnion) in an effort to compete with FICO.
Is it successful?
Yes! But mostly just with consumers, generally not with banks and lenders. Most people who are checking their own credit score, are receiving their VantageScore.
Is it accurate?
Not so much! It gives you an idea of what range you are in and what factors go into calculating your score, but in my experience it’s not an accurate representation of your actual FICO score.
Here’s the problem with that:
Most consumers are getting their VantageScore 3.0 credit score. But most lenders (90%) are checking their FICO scores. This can result in a big difference between the score consumers are seeing vs what the lenders see.
When you’re planning to apply for a loan or looking for a new credit card, it’s important to see the score that most resembles what your bank or lender will see.
It’s True – You Get What You Pay For
People love free! I love free too.
But let’s be honest – you get what you pay for.
Do you have NetFlix? If you do, then you probably know how amazing it is for the price (I pay $13.99/mo for it).
What’s the alternative to NetFlix? Free over-the-air, local TV?
Over-the-air programming is “pretty good” in general. But if you put it up against NetFlix, I think we can all agree – it sucks in comparison!
In my opinion, it’s the same with a “free” service like Credit Karma vs a top premium credit monitoring service like Experian IdentityWorks.
You Can Do Better Than a “Free Credit Score”
When it comes to your credit score, you can do much better than “Free” if you’re just willing to invest $10 to $20 per month, depending on what level of monitoring and protection you want.
For example:
I use a service called Experian IdentityWorks, and I subscribe to the Premium version of that product. It costs $19.99/month.
Too expensive you say? I strongly disagree!
Here’s why:
First of all, Experian IdentityWorks is light-years better than any “free credit score” service out there (more on that below).
Second, it’s only 67 cents a day! That’s a fraction of the cost of a cup of coffee!
Best way to monitor your FICO Scores?
I’ve tried nearly every credit monitoring service out there (both free and premium).
So what’s the best way to check and monitor your FICO scores?
My #1 pick – Experian IdentityWorks!
What is Experian IdentityWorks?
Experian IdentityWorks is a comprehensive Credit Monitoring and Identity Theft Protection service. Its top priority is to protect you from identity theft, but it’s also (in my opinion) the best credit monitoring service currently available.
What you get with Experian IdentityWorks
IdentityWorks has two levels of protection and monitoring – Plus and Premium.
Benefits of IdentityWorks Plus:
The Plus version includes the dark web surveillance and ID theft insurance, but only comes with 1 FICO score (based on Experian data) and monitors one credit bureau (Experian).
Here’s the feature list according to their site:
- Experian Credit Monitoring Alerts
- Dark Web Surveillance Alerts
- Experian CreditLock with Alerts
- Up to $1 Million Identity Theft Insurance2
- Dedicated Fraud Resolution Support
- Daily FICO® Scores1 based on Experian Data
- FICO® Score Tracker based on Experian Data
Pricing: 30-Day Free Trial, then $9.99/month after that.
Benefits of IdentityWorks Premium:
The Premium version includes everything from the Plus version, AND the following premium benefits:
- 3-Bureau Credit Monitoring and Alerts
- Quarterly 3-Bureau FICO® Scores1
- Financial Account Takeover Alerts
- Social Security Number Trace Alerts
- Change of Address Alerts
- Court Records and Booking Alerts
- Non-Credit Loan Alerts
- Sex Offender Registry Alerts
Pricing: 30-Day Free Trial, then $19.99/month after that.
My recommendation
I definitely recommend IdentityWorks Premium (it’s what I use). I believe it’s the most comprehensive credit monitoring/identity theft protection service available.
But at the very least, I recommend ditching the “Free Credit Score” and getting your true FICO score
